Forex Market: EUR/USD daily trading forecast

Yesterday’s trade saw EUR/USD within the range of 1.1180-1.1333. The pair closed at 1.1189, falling 0.90% on a daily basis, while extending losses from Friday. The daily low has been the lowest level since September 10th, when the cross registered a low of 1.1170. In weekly terms, EUR/USD lost 0.31%, following a 1.73% advance in the prior week.

At 13:29 GMT today EUR/USD was losing 0.31% for the day to trade at 1.1155. The pair touched a daily low at 1.1148 at 12:10 GMT. It has been the lowest level since September 9th, when a daily low of 1.1130 was recorded.

Today the cross may be influenced by a number of macroeconomic reports as listed below.

Fundamentals

Euro area

Consumer Confidence – preliminary estimate

Confidence among consumers in the Euro area probably remained unchanged in September. The preliminary value of the consumer confidence index probably was at -6.9 this month, stable compared to the final estimate in August. The latter was down from a preliminary reading of -6.8, which was reported on August 21st. The index measures consumer confidence on a scale of -100 to +100. A reading of -100 suggests a lack of confidence, zero means neutrality and a reading of +100 indicates extreme levels of confidence. The index reflects the level of optimism, which consumers have about economic development in the region. The Business and Consumer Survey is conducted by phone and includes 23 000 households in the Euro area. The questions asked stress on current economic and financial situation, savings intention and also on expected developments regarding consumer price indexes, general economic situation and major purchases of durable goods. This indicator is one of the five major components, that comprise the Economic Sentiment Indicator (ESI).

Higher confidence usually implies greater willingness to spend, including large-ticket purchases, while consumer spending is among the key factors driving economic growth. Therefore, in case the consumer confidence index was reported above expectations, this would cause a moderate bullish impact on the euro. The European Commission is expected to release the preliminary reading at 14:00 GMT.

Correlation with other Major pairs

Taking into account the week ended on September 20th and the daily closing levels of the major currency pairs, we come to the following conclusions in regard to the strength of relationship:

EUR/USD to GBP/USD (0.7510, or strong)
EUR/USD to AUD/USD (0.1135, or weak)
EUR/USD to NZD/USD (-0.2748, or weak)
EUR/USD to USD/CAD (-0.4139, or moderate)
EUR/USD to USD/JPY (-0.6707, or strong)
EUR/USD to USD/CHF (-0.9881, or very strong)

1. During the examined period EUR/USD moved strongly in one and the same direction with GBP/USD, while moving strongly in the opposite direction compared to USD/JPY.

2. EUR/USD moved almost equally in the opposite direction compared to USD/CHF during the past week. The correlation between the two pairs was almost perfect.

3. The strength of relationship between EUR/USD and AUD/USD, EUR/USD and NZD/USD was insignificant during the period in question.

Daily and Weekly Pivot Levels

By employing the traditional calculation method, the daily pivot levels for EUR/USD are presented as follows:

Central Pivot Point – 1.1234
R1 – 1.1288
R2 – 1.1387
R3 – 1.1441

S1 – 1.1135
S2 – 1.1081
S3 – 1.0982

By using the traditional method of calculation, the weekly pivot levels for EUR/USD are presented as follows:

Central Pivot Point – 1.1326
R1 – 1.1439
R2 – 1.1574
R3 – 1.1687

S1 – 1.1191
S2 – 1.1078
S3 – 1.0943