Forex Market: EUR/USD daily trading outlook

Fridays trade saw EUR/USD within the range of 1.1324 – 1.1467, the highest in 3-1/2 months. The pair closed at 1.1449, gaining 0.41% on a daily basis and settling the week 2.2% higher, a fifth straight weekly increase.

At 06:51 GMT today EUR/USD was down 0.14% for the day to trade at 1.1433. The pair held in a daily range of 1.1418 – 1.1450.

Fundamentals

Eurozone

It will be a pretty dry session on Monday in terms of fundamental indicators. The surplus on Italys trade balance probably narrowed to EUR 3.10 billion in March, according to market expectations, from a surplus figure of EUR 3.54 billion in February.

The latter was a nearly 34% increase compared to the surplus of EUR 2.65 billion registered a year earlier as lower energy costs curbed imports. Inbound shipments rose 1% to EUR 29.5 billion, while excluding energy, imports rose 6.8%. Exports rose by an annualized 3.7% to EUR 32.98 billion, with shipments to European Union members rising 1.1%, while exports to outside the EU grew 7.1%.

Italy has been posting continuous trade surpluses since February 2013 due to rising exports and shrinking imports, and registered in 2014 its biggest trade surplus since 1993.

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 Italys 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.

United States

In the US, the National Association of Home Builders (NAHB) Housing Market Index probably inched up in May to 57.0, according to analysts expectations, from 56.0 in April. If so, this would be the eleventh consecutive month when the gauge stood in the area above 50.0.

The indicator is based on a monthly survey of about 900 home builders in regard to current home sales and expected sales in the coming six months. Values above the key level of 50.0 indicate that housing market conditions are improving. Therefore, higher-than-projected readings would provide support to the greenback. The official data is scheduled for release at 14:00 GMT.

Pivot points

According to Binary Tribune’s daily analysis, the pair’s central pivot point stands at 1.1413. In case it penetrates the first resistance level at 1.1503, it will encounter next resistance at 1.1556. If breached, upside movement may attempt to advance to 1.1646.

If the cross drops below its S1 level at 1.1360, it will next see support at 1.1270. If the second key support zone is breached, downward movement may extend to 1.1217.

In weekly terms, the central pivot point is at 1.1350. The three key resistance levels are as follows: R1 – 1.1570, R2 – 1.1687, R3 – 1.1907. The three key support levels are: S1 – 1.1233, S2 – 1.1013, S3 – 1.0896.