EUR/USD Forecast and Trade Ideas for June 02 2016

Previous trading day:

Federal Reserve Beige Book has been released yesterday exposing economic conditions across twelve Fed districts for period April through mid-May. Majority of districts reported modest economic growth followed with also modest employment increase noting tight labor market and growing cost of labor. Reported manufacturing activity was mixed across districts, with construction and real estate sectors generally expanded. However, reported growth in consumer spending followed with price pressure modestly picking up, could give some accommodation for Fed officials when deciding on policy move during forthcoming FOMC meeting.

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Today`s central event is going to be European Central Bank policy meeting, where decision on central bank rates and lending facility will be issued. Latest change in policy has been made during March meeting when deposit facility rate was cut to negative territory of  -0.4%. During April meeting corporate sector bond purchase program (CSPP) was adopted as additional monetary measure, which will start being operative during June. During previous period several ECB members noted that implemented measures need time to reveal fully in the economy, and with additional program adopted pending to be fully implemented, market is not expecting to see any change in ECB policy at this moment. However, how current economic developments are perceived by ECB  members is going to be revealed today at press conference which will take place immediately after policy meeting.

List of results released during previous day are following:

EU results 01-JunFinal Markit Germany Manufacturing PMI for May is modestly corrected to 52.1 from 52.4 posted during initial release for May. After modest drop in February to level of 50.2 from 52.3 reported month earlier, Markit index is slowly but continuously heading back to the levels from the beginning of the year, implying on increasing manufacturing activity in Germany. On the other side, Markit Manufacturing PM index for Euro zone has been confirmed at 51.5 for May, without change from initially posted data.  Index has dropped since the beginning of the year, raising concerns among economists regarding growth of Euro zone economy during second quarter.

US results 01-JunFinal Markit US Manufacturing PM index is modestly corrected to 50.7 from 50.5 initially released. Since the beginning of the year manufacturing sentiment is continuously decreasing, reaching its lowest level in May. During January index was standing at 52.4.

Institute for Supply Management US Manufacturing index for May reached 51.3, which is increase from 50.8 previously posted and above market consensus at 50.4.

Data on US Construction Spending came as a great surprise to market considering decrease of -1.8% released for April on a monthly basis, which is significant drop from previously posted figure of 0.3% and market consensus at 0.5%.

 

DAY AHEAD:

EUR/USD Economic Calendar for today is following:

Fundamentals 02-JuneEuro zone Producer Price Index for April will be released today both on a monthly and yearly basis. In line with deflation trend in Euro zone, producer prices are following decreasing trend, reaching -4.2% on a yearly basis during March. Market is expecting quite modest improvement for April with PPI reaching -4.1%y/y.

After unexpected drop in US Initial Jobless Claims during third week of May, for previous week market is expecting to see quite modest increase with jobless claims reaching 270k.

Update on released results you can follow-up on Euro Dollar News and EUR/USD Economic Calendar.

 

Chart of day:

Chart 02-juneCheck also Euro Dollar History Graph.

EUR/USD was traded yesterday in range of some 80 pips from levels 1.111 up to 1.119, with currency pair heading toward short term resistance level at 1.12.

Clear break from 1.12 resistance level would lead currency pair to next levels at 1.1320 up to 1.1390.

On the opposite side, support levels are at 1.113, tested during previous periods and 1.11 where currency pair found support during last week. Clear break of current support levels would lead to next levels at 1.105 down to 1.096 and 1.082 which is long term support level.

Below are presented some trading ideas for today, based on technical analysis taking into account current level of EUR/USD trend and excluding overnight open positions.

Trade idea 02-juneFor long term EUR/USD forecast from investment bankers check Euro to Dollar Forecast

Disclaimer: Above presented trading ideas represent personal view of the author and should not be treated as any sort of investment advice or trading recommendation.

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