Yesterday, the Euro remained neutral and traded in a very tight range compared to its usual range. However, traders were mulling the causes for which the euro is holding above 1.23 in spite of worse-than-expected European data releases, and the pressure exerted by inflation in the Euro-zone and energy prices.
The question is: How could the Euro break below such historical support levels?
The answer to this question came after the ECB’s last week’s meeting, where a ‘massive weakening’ in the Euro-zone economy was conveyed. This subsequently frustrated traders.
Technically speaking, the EUR/USD is bearish with a major support at 1.2230 provided by the monthly pivot and then again at 1.2215 from a major multi-year trend-line.
Here are the major Resistance (R) & Support (S) levels of the EUR/USD:
S2 S1 Pivot Point R1 R2
1.2194 1.2233 1.2290 1.2350 1.2420
As for today’s figures, we’ll start with Europe, specifically Germany; where the Trade Balance announcement is scheduled for release, measuring the difference in worth between exported and imported goods over the month. A positive number indicates that more goods were exported than imported.
Ø Forecast: 19.2 B
Ø Previous: 18.5 B
A higher than expected reading should be taken as positive for the EUR, while a lower than expected reading should be taken as negative for the EUR.
Moving to the UK, the Manufacturing Production announcement will be released; measuring the change in the total inflation-adjusted value of output produced by manufacturers. The manufacturing sector accounts for approximately 80% of the overall industrial production.
Ø Forecast: 0.2%
Ø Previous: 0.4%
A higher than expected reading should be taken as positive for the GBP, while a lower than expected reading should be taken as negative for the GBP.
The National Institute of Economic and Social Research (NIESR) Gross Domestic Product (GDP) Estimate is also scheduled for release; measuring the change in the estimated value of all goods and services produced by the economy during the previous three months. The NIESR estimates GDP data on a monthly basis in order to predict the quarterly government-released data.
Ø Forecast: N/A
Ø Previous: 0.7%
A higher than expected reading should be taken as positive for the GBP, while a lower than expected reading should be taken as negative for the GBP.
As for the U.S., a survey made by the U.S. Bureau of Labor Statistics will be released; in order to measure the job vacancies volume. The data is compiled from employers concerning their businesses' employment, job openings, recruitment, hires and separations.
The JOLTS defines the job openings of all opened (not filled) positions on the last business day of the month. A job is "open" only if it meets all three of the following conditions:
1. A specific position that exists and a work’s availability for that position.
2. The job could start within 30 days, whether the establishment finds a suitable candidate during that time or not.
3. There is an active recruiting for workers from outside the firm location that has the opening job.
Ø Forecast: 4.790 M
Ø Previous: 4.735 M
A reading that is stronger than forecast is generally supportive for the USD, while a weaker than forecast reading is generally negative for the USD.
Moving to Australia, the Westpac Consumer Sentiment Index will be released; measuring the change in the level of consumer confidence in the economic activity.
A level above 100.0 indicates optimism; while a level below 100.0 indicates pessimism. The data is compiled from a survey of about 1,200 consumers which asks the respondents to rate the relative level of the past and future economic conditions.
Ø Forecast: N/A
Ø Previous: 1.9%
A higher than expected reading should be taken as positive for the AUD, while a lower than expected reading should be taken as negative for the AUD.
Finally from Japan, the Business Sentiment Index (BSI) of the large manufacturing conditions is scheduled for release; measuring the business sentiment in the manufacturing sector. It is a key indicator of the strength of the Japanese economy, which relies heavily on the manufacturing industry.
A level above zero indicates improving conditions; while a level below zero indicates worsening conditions.
Ø Forecast: 13.1
Ø Previous: 12.7
A higher than expected reading should be taken as positive for the JPY, while a lower than expected reading should be taken as negative for the JPY.
Disclaimer: the prices and news mentioned in this outlook are absolutely no guarantee of future market performance. Financial markets can move in either direction causing profits to be made or complete losses to be incurred by the trader.
Each trader must decide for themselves what their risk appetite is and ensure that correct risk management procedures are in place before placing any trades.
Engaging in CFDs or Spot FX carries a high risk to your capital. You should not engage in this form of investing unless you understand the nature of the Transaction you are entering into and the true extent of your exposure to the risk of loss. Your profit and loss will vary according to the extent of the fluctuations in the price of the underlying markets on which the trade is based.