Forex Market: EUR/USD daily trading outlook

Friday’s trade saw EUR/USD within the range of 1.1028-1.0862. The pair rose 0.87% to 1.0978, a third straight daily gain, settling the week 0.8% higher.

At 10:10 GMT today EUR/USD was up 0.10% for the day to trade at 1.0982. The pair held in a daily range of 1.0966 – 1.1018.

Fundamentals

Eurozone

The number of unemployed people in Spain fell by 60 200 in March following a 13 500 drop a month earlier, data by the Ministry of Employment and Social Security showed. This compared to analysts median estimate of -18 300.

The gauge measures the change in in the number of unemployed people during the previous month. An increase implies that consumer spending may be less active, while the latter is tightly related to economic growth. A decrease suggests the opposite.

Meanwhile, consumer confidence also improved in March, with the respective index jumping to 100.4 from 99.0 in February, however trailing projections for a jump to 101.7.

The Consumer Confidence Index is based on responds to a phone survey conducted among 1 000 individuals aged over 16 who are representative of the Spanish society as a whole. The questionnaire is focused on current economic sentiment, savings intentions, but also on expected developments regarding the general state of the economy and major purchases of durable goods. The index shows the difference between the people who are optimistic and those who are pessimistic in their sentiment on a scale ranging between 0 and 200, with 100 being the neutral level. A positive, and more importantly, a better-than-expected reading, supports the euro, and vice versa.

United States

Activity in the US sector of services probably grew faster in March from a month earlier, with the final March reading expected to confirm a preliminary reading of 58.6 released March 26th, compared to 57.1 in February. If confirmed, this would be the fastest pace of growth since September. The PMI is based on data collected from a representative panel of more than 400 private sector companies, which encompasses industries such as transport and communication, financial intermediaries, business and personal services, computing & IT, and hotels and restaurants. Values above the key level of 50.0 indicate optimism (expanding activity). Higher-than-expected PMI readings would support the US dollar. Markit Economics will release the report at 13:45 GMT.

The Institute for Supply Management will publish its separate and more widely tracked data on US services sector growth at 14:00 GMT. The ISM is expected to report a March reading of 56.5, compared to 56.9 in February. The metric has remained above the expansion-contraction threshold of 50 since December 2009. This is a compound index based on the values of four equally-weighted components that comprise it. These sub-indexes reflect seasonally adjusted new orders, seasonally adjusted employment, seasonally adjusted business activity and supplier deliveries.

The business report is based on data compiled from monthly replies to questions asked of over 370 purchasing and supply executives operating in over 62 different industries, which represent nine divisions from the Standard Industrial Classification (SIC) categories.

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, and vice versa. If 100% of the respondents saw no change in conditions, the index will show a reading of 50.0. Therefore, values above the key level of 50.0 are indicative of optimism (expanding activity). A better-than-expected reading would boost the US dollar, and vice versa.

Pivot points

According to Binary Tribune’s daily analysis, the pair’s central pivot point stands at 1.0956. In case it penetrates the first resistance level at 1.1050, it will encounter next resistance at 1.1122. If breached, upside movement may attempt to advance to 1.1216.

If the cross drops below its S1 level at 1.0884, it will next see support at 1.0790. If the second key support zone is breached, downward movement may extend to 1.0718.

In weekly terms, the central pivot point is at 1.0906. The three key resistance levels are as follows: R1 – 1.1100, R2 – 1.1222, R3 – 1.1416. The three key support levels are: S1 – 1.0784, S2 – 1.0590, S3 – 1.0468.