Forex Market: EUR/USD daily trading forecast

Friday’s trade saw EUR/USD within the range of 1.1277-1.1365. The pair closed at 1.1288, losing 0.28% on a daily basis.

At 8:27 GMT today EUR/USD was up 0.26% for the day to trade at 1.1317. The pair touched a daily high at 1.1339 at 8:32 GMT.

Fundamentals

Manufacturing data

Activity in Italy’s sector of manufacturing probably improved in January, with the corresponding PMI rising to 49.0, as expected by experts. In December the PMI plunged to 48.4, which has been the lowest reading since May 2013, when the gauge was reported at 47.3. Markit Economics is expected to release the official data at 8:45 GMT.

France’s final manufacturing PMI probably remained in the zone of contraction for a ninth consecutive month during January, while confirming the preliminary PMI reading of 49.5, which was reported on January 23rd. In December the PMI came in at a final value of 47.5, which has been the lowest level since August 2014, when the gauge was reported at 46.9. The final PMI data is due out at 8:50 GMT.

The final reading of German manufacturing PMI probably confirmed the preliminary value for January, with the index coming in at 51.0. In December the final PMI stood at 51.2, also confirming the preliminary reading. Markit will release the final PMI data at 8:55 GMT.

The final manufacturing PMI in the Euro zone probably also confirmed the preliminary value in January, with the index remaining at 51.0. If so, this would be the highest level since July 2014, when the indicator was reported at a final 51.8. In December the final PMI was registered at 50.6. The PMI reflects the performance of the manufacturing sector in the Euro area and is based on a survey of 3 000 manufacturing companies. National data are included for Germany, France, Italy, Spain, the Netherlands, Austria, the Republic of Ireland and Greece. These member states together account for almost 90% of the Euro zone’s manufacturing activity. The Manufacturing Purchasing Managers Index is comprised by five individual indexes with the following weights: New Orders (30%), Output (25%), Employment (20%), Suppliers’ Delivery Times (15%) and Stock of Items Purchased (10%), as the Delivery Times index is inverted, so that it moves in a comparable direction.

In case the final PMI readings exceeded expectations, the common currency would receive a boost. The official manufacturing data for the Euro region as a whole is scheduled to be released at 9:00 GMT.

United States

Personal Income, Personal Spending

Personal spending in the United States probably dropped 0.2% in December compared to a month ago, according to market expectations, while personal income was probably up 0.2%. Spending rose 0.6% in November, which has been the fastest rate of increase since March 2014. At the same time, personal income increased 0.4% (or USD 54.4 billion) in November, while disposable personal income (DPI) rose USD 42.4 billion (or 0.3%). Personal consumption expenditures (PCE) increased USD 67.9 billion, or 0.6% during the period. Higher-than-expected rates of increase imply good employment conditions and, therefore, are dollar positive. The Bureau of Economic Analysis is to publish the official figures at 13:30 GMT.

Manufacturing PMI by the ISM

Activity in United States’ manufacturing sector probably continued slowing down the pace in January, with the corresponding manufacturing PMI coming in at a reading of 54.5, according to expectations, from a revised down 55.1 in December (55.5 previously). If so, this would be the lowest PMI level since March 2014, when a reading of 53.7 was reported. In December the New Orders Index slipped to 57.3 from 66.0 in November, while the Production Index came in at 58.8, down from the November reading of 64.4. At the same time, the Employment Index improved to 56.8 in December from 54.9 in November. 11 out of 18 industries registered growth during December, according to the report by the ISM.

The Manufacturing Purchasing Managers’ Index (PMI) is a compound index, which represents manufacturing activity in 18 different industries. It is comprised by four equally-weighted components: seasonally adjusted employment, seasonally adjusted production inventories, seasonally adjusted new orders and supplier deliveries. The index is based on a survey of 300 purchasing managers.

Participants can either respond with “better”, “same”, or “worse” to the questions about the industry, in which they operate. The resulting PMI value is measured from 0 to 100. If the index shows a value of 100.0, this means that 100% of the respondents reported an improvement in conditions. If the index shows a value of 0, this means that 100% of the respondents reported a deterioration in conditions. If 100% of the respondents saw no change in conditions, the index will show a reading of 50.0. Therefore, readings above the key level of 50.0 are indicative of optimism (expanding activity) in the sector of manufacturing. In case the PMI slowed down more than anticipated, this would certainly have a bearish effect on the greenback. The Institute for Supply Management (ISM) is to release the official reading at 15:00 GMT.

Pivot Points

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 1.1310. In case EUR/USD manages to breach the first resistance level at 1.1343, it will probably continue up to test 1.1398. In case the second key resistance is broken, the pair will probably attempt to advance to 1.1431.

If EUR/USD manages to breach the first key support at 1.1255, it will probably continue to slide and test 1.1222. With this second key support broken, the movement to the downside will probably continue to 1.1167.

The mid-Pivot levels for today are as follows: M1 – 1.1195, M2 – 1.1239, M3 – 1.1283, M4 – 1.1327, M5 – 1.1371, M6 – 1.1415.

In weekly terms, the central pivot point is at 1.1270. The three key resistance levels are as follows: R1 – 1.1442, R2 – 1.1596, R3 – 1.1768. The three key support levels are: S1 – 1.1116, S2 – 1.0944, S3 – 1.0790.