Forex Market: EUR/CZK daily trading forecast

Yesterday’s trade saw EUR/CZK within the range of 27.5390-27.6540. The pair closed at 27.6095, gaining 0.04% on a daily basis.

At 6:30 GMT today EUR/CZK was up 0.07% for the day to trade at 27.6245, which is also the current daily high.

Fundamental view

Euro zone

The deficit on France’s balance of trade probably shrank to 5.0 billion EUR during July, according to the median forecast by experts. In June nations deficit figure reached 5.380 billion EUR, or the largest gap since January. Frances exports rose 1.8% to 36.735 billion EUR, while total imports climbed at a pace of 2.2% to 42.115 billion EUR in June.

Nation’s trade balance reflects the difference in value between exported and imported goods during the respective period. Export demand has a direct link to demand for the national currency and also causes an impact on levels of production. In case French trade balance deficit contracted more than projected, this would have a bullish effect on the euro. The Ministry of Finance will publish the official figure at 6:45 GMT.

Czech Republic

Current Account

At 7:00 GMT the Czech National Bank will release its report on nations current account for the second quarter. In Q1 Czech current account produced a record high surplus at the amount of 2.633 billion EUR.

The current account reflects the difference between nation’s savings and its investments. It is the sum of the balance of trade, net current transfers (cash transfers) and net income from abroad (earnings from investments made abroad plus money sent by individuals working abroad to their families back home, minus payments made to foreign investors).

A current account surplus indicates that a country’s net foreign assets have increased by the respective amount, while a deficit suggests the opposite. A country with a surplus on its current account is considered as a net lender to the rest of the world, while a current account deficit puts it in the position of a net borrower. A net lender is consuming less than it is producing, which means it is saving and those savings are being invested abroad, or foreign assets are created. A net borrower is consuming more than it is producing, which means that other countries are lending it their savings, or foreign liabilities are created. Therefore, a widening surplus or a contracting deficit on the current account of a nation usually has a bullish effect on its currency.

Consumer Inflation

Annualized index of consumer prices in the country probably remained unchanged at 0.5% in August, according to market expectations. If so, it would still be the highest annual rate since December 2013.

The CPI measures the change in price levels of a basket of goods and services from consumer’s perspective and also reflects purchasing tendencies. In case consumer inflation accelerated more than anticipated, this would have a bullish effect on the local currency. The Czech Statistical Office is to release the official CPI report at 7:00 GMT.

Technical view

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 27.6008. In case EUR/CZK manages to breach the first resistance level at 27.6627, it will probably continue up to test 27.7158. In case the second key resistance is broken, the pair will probably attempt to advance to 27.7777.

If EUR/CZK manages to breach the first key support at 27.5477, it will probably continue to slide and test 27.4858. With this second key support broken, the movement to the downside will probably continue to 27.4327.

The mid-Pivot levels for today are as follows: M1 – 27.4593, M2 – 27.5168, M3 – 27.5743, M4 – 27.6318, M5 – 27.6893, M6 – 27.7468.

In weekly terms, the central pivot point is at 27.6478. The three key resistance levels are as follows: R1 – 27.7737, R2 – 27.9398, R3 – 28.0657. The three key support levels are: S1 – 27.4817, S2 – 27.3558, S3 – 27.1897.