Forex Market: EUR/USD daily trading outlook

Yesterday’s trade saw EUR/USD within the range of 1.2578-1.2480. The pair closed at 1.2546, gaining 0.50% on a daily basis.

At 8:14 GMT today EUR/USD was down 0.18% for the day to trade at 1.2520. The pair broke held in a daily range of 1.2515-1.2567.

Fundamentals

Eurozone

Markit Economics is expected to report that activity in the Eurozone’s services sector grew in October at the same pace as a month earlier, with the respective Services Purchasing Managers’ Index projected to come in at 52.4. Meanwhile, the Markit Composite PMI will likely confirm a preliminary reading of 52.2, inching up from 52.0 in September. The reports are due at 09:00 GMT.

Annualized retail sales in the Euro region as a whole probably rose 1.2% in September, according to the median forecast by experts, after scoring a 1.9% jump in August. This would be the ninth straight month of annualized gains.

In monthly terms, retail sales probably dropped 0.8% in September, reversing a 1.2% gain a month earlier. If confirmed, this would be the sharpest decline since December 2013.

This is a short-term indicator, which provides key information about consumption on a national scale. In case the index of retail sales rises at a faster-than-projected pace, this would have a bullish effect on the euro. Eurostat is expected to publish the official data at 10:00 GMT.

Within the Eurozone, Spain’s services sector grew at a slightly faster pace in October, with the corresponding Spanish Services PMI coming in at 55.9 compared to 55.8 in September, the 12th straight monthly expansion. Analysts had projected a rise to 56.0.

Activity in Italy’s services sector probably contracted at a slower pace, but nevertheless for the third straight month. The Italian Services PMI, prepared by Markit, will likely register at 49.2 compared to 48.8 in September.

France’s services sector probably contracted for a second month, and at an accelerating pace. The French services PMI will likely come in at 48.1, confirming a preliminary reading, and further slowing down from 48.4 in September.

Germany, Europe’s leading economy, is expected to see its 17th straight month of services sector growth, albeit continuing a recent slowdown trend. The respective German Services PMI will register at 54.8 in October, according to analysts’ forecasts, confirming a preliminary reading but trailing September’s final value of 55.7.

United States

The first slew of US employment data is due on Wednesday at 13:15 GMT. Automatic Data Processing is expected to report that US employers in the non-farm private sector added 220 000 jobs in October, compared to 213 000 in September. If confirmed, this would be the highest payroll gain since June.

The employment report by Automatic Data Processing Inc. (ADP) is based on data that encompasses 400 000 – 500 000 companies, employing over 24 million people and operating in the 19 major sectors of the economy.

Published two days ahead of the governments employment statistics, this report is used by traders as a reliable predictor of the official non-farm payrolls data. Creation of jobs is considered of utmost importance for consumer spending, while the latter is a major driving force behind economic growth. In case expectations were exceeded, this would bolster demand for the dollar.

Later in the day, Markit Economics is expected to report a slowing growth in the US services sector in October, with the respective Services PMI projected to confirm a preliminary reading of 57.3, compared to 58.9 a month earlier. The report is due at 14:45 GMT.

The Institute for Supply Management is also anticipated to report a slowdown in the sector, with its ISM Non-Manufacturing PMI likely to register at 58.0, down from 58.6 the previous month. ISMs figures will be released 15 minutes later.

Technical view

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 1.2535. In case EUR/USD manages to breach the first resistance level at 1.2589, it may continue up to test 1.2633. In case the second key resistance is broken, the pair may attempt to advance to 1.2687.

If EUR/USD manages to breach the first key support at 1.2491, it could continue to slide and test 1.2437. With this second key support broken, movement to the downside may extend to 1.2393.

The mid-pivot levels for today are as follows: M1 – 1.2415, M2 – 1.2464, M3 – 1.2513, M4 – 1.2562, M5 – 1.2611, M6 – 1.2660.

In weekly terms, the central pivot point is at 1.2594. The three key resistance levels are as follows: R1 – 1.2703, R2 – 1.2882, R3 – 1.2991. The three key support levels are: S1 – 1.2415, S2 – 1.2306, S3 – 1.2127.