Forex Market: EUR/USD daily trading outlook

Yesterday’s trade saw EUR/USD within the range of 1.0702-1.0570. The pair closed at 1.0687, gaining 0.31% on a daily basis.

At 7:30 GMT today EUR/USD was down 0.23% for the day to trade at 1.0657. The pair held in a daily range of 1.0648 – 1.0747.

Fundamentals

Eurozone

The surplus on Italys trade balance probably widened to EUR 1.210 billion in February, according to analysts expectations, from a surplus figure of EUR 0.219 billion in January, which was a significant drop from Decembers EUR 5.756 billion.

The trade balance, as an indicator, measures the difference in value between the country’s exported and imported goods during the reported period. It reflects the net export of goods, or one of the components to form the Gross Domestic Product. Generally, exports reflect how strong economic growth is, while imports indicate the strength of domestic demand. In case Italian trade surplus narrowed more than anticipated, this might have a certain bearish effect on the single currency. The National Institute of Statistics (Istat) is to release the official trade data at 08:00 GMT.

Meanwhile, the deficit on Spains trade balance probably shrank to EUR 2.00 billion, according to the median forecast by experts, from EUR 2.60 billion in January. Spain has regular deficits on its trade balance because of its high imports of fuel and high added value goods.

In case nations trade deficit widened more than anticipated, this might have a bearish effect on the single currency. Spains Statistical Office is to release the official trade data at 8:45 GMT.

United States

The number of housing starts in the United States probably rose to 1.040 million in March from the seasonally adjusted annual rate of 0.897 million during the prior month.

Housing Starts represent a gauge to measure residential units, on which construction has already begun, every month. A start in construction is defined as the foundation laying of a building and it encompasses residential housing primarily.

Meanwhile, the number of building permits in the country probably dropped to 1.080 million last month from a revised annual level of 1.102 million in February, which was a pre-recession high.

Building permits are issued in order to allow excavation. An increase in the number of building permits and housing starts usually occurs a few months after mortgage rates in the country have been reduced. Permits are not required in all regions of the United States. Building permits, as an indicator, provide information regarding demand in the US housing market. In case a higher-than-anticipated figure is reported, this will certainly support the US dollar. The official housing data is due out at 12:30 GMT.

Jobless claims

A separate report by the Labor Department is expected to show that the number of Americans who filed for initial unemployment benefits in the week ended April 11th inched down to 280 000 from 281 000 the previous week. The four-week moving average, which irons out week-to-week volatility, was at 282 250 last week.

Initial jobless claims number is a short-term indicator reflecting lay-offs in the country. In case the number of claims dropped more than projected, this would have a bullish effect on the greenback.

The number of continuing jobless claims probably rose to 2 312 000 during the week ended March 4th from 2 304 000 the previous period. This indicator reflects the actual number of people unemployed and currently receiving unemployment benefits, who filed for unemployment assistance at least two weeks ago.

Also due today, the Philadelphia Fed Manufacturing Index probably increased to a reading of 6.0 in April from 5.0 index points during the previous month, which was the lowest since February 2014, when the index was reported in negative territory.

The metric is based on a monthly business survey (the Business Outlook Survey), measuring manufacturing activity in the third district of the Federal Reserve, Philadelphia. Participants give their opinion about the direction of business changes in overall economy and different indicators of activity in their companies, such as employment, working hours, new and existing orders, deliveries, inventories, delivery time, price etc. The survey has been conducted every month since May 1968. The results are presented as the difference between the percentages of positive and negative projections. A level above zero is indicative of improving conditions, while a level below zero is indicative of worsening conditions. The Federal Reserve Bank of Philadelphia is expected to release the official results from the survey at 14:00 GMT. Higher-than-expected index readings would have a bullish effect on the greenback.

Pivot points

According to Binary Tribune’s daily analysis, the pair’s central pivot point stands at 1.0653. In case it penetrates the first resistance level at 1.0736, it will encounter next resistance at 1.0785. If breached, upside movement may attempt to advance to 1.0868.

If the cross drops below its S1 level at 1.0604, it will next see support at 1.0521. If the second key support zone is breached, downward movement may extend to 1.0472.

In weekly terms, the central pivot point is at 1.0736. The three key resistance levels are as follows: R1 – 1.0905, R2 – 1.1206, R3 – 1.1375. The three key support levels are: S1 – 1.0435, S2 – 1.0266, S3 – 0.9965.