EUR/USD Forecast and Trade Ideas for June 03 2016

Previous trading day:

European Central Bank did not made any changes to current policy rates and measures which have been fully in line with market expectations. Considering that its corporate bond purchase program, adopted in April, is to become operative on June 6th, its effects are to be seen in the future period. In addition, new stimulus of long-term loans to banks has been announced to become operative on June 22nd. Although Euro Zone economy posted relatively modest growth of 0.5% during first quarter of this year, deflation trend is still evident, supported by decreased oil prices. President Draghi noted ECB expectation that inflation will stay low or negative until second half of this year, and that additional stimulus might be implemented if necessary.

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List of results released during previous day are following:

EU results 02-JunEuro Zone Producer Price Index dropped again during April, reaching -0.3% on a monthly basis. Result is significantly lower both from market estimate of 0.1% m/m and 0.3% posted for previous month. PPI on a yearly basis dropped further into negative territory reaching -4.4% down from -4.2% posted for March, and below market consensus at -4.1%.

US results 02-JuneUS Initial Jobless Claims are continuing weekly down trend, reaching 267k during previous week, down from 268k posted previously. Result is also better from market estimate at 270k.

DAY AHEAD:

EUR/USD Economic Calendar for today is following:

Fundamentals - 03JuneMarkit Germany and Euro Zone Services PMI will be released today as final index estimate for May. Market is not expecting any significant change from initially posted figures of 54.7 for Germany and 53.1 for Euro Zone.

Euro Zone Retail Sales: results for April will be released both on monthly and yearly basis. Since end of last year modest slowdown in retail sales is evident. Although March data showed decrease of index for -0.5% on a monthly basis, market is expecting modest improvement for April, with consensus at 0.4%, and without any change in figure on a yearly basis of 2.1% as posted previously.

US Unemployment rate: results for May will be released. Currently very important indicator to watch considering Fed`s targeting of full employment, and following expectations of several Fed members on further drop in unemployment. Since October last year, US unemployment rate has been steady at 5.0%, with exception of January and February of this year, when indicator reached 4.9%. Market estimates further decrease in indicator to 4.9% in May.

US Change in Non-farm Payrolls: results for May will be released. Non-farm payrolls for April of 160k reached its lowest level since September of last year, while market expectations are on side of modest increase to 164k.

Average Hourly Earnings: results for May will be released both on monthly and yearly basis. After unexpected drop of -0.1% on a monthly basis in February this year, hourly earnings reverted to positive territory, with increase of 0.3% both for March and April. Market is estimating further modest increase for May of 0.2%.

US Trade Balance results for April will be released with market expectations on further modest increase in trade deficit to $-41.0b from $-40.4b released for March.

Markit US Services: May final estimate will be released today with market expectation of some improvement of sentiment for services to 51.4 from 51.2 initially posted.

US Factory Orders: results for April will be released. After significant drop in factory orders during February of -1.7% on a monthly basis, indicator reverted to 1.1% during March. Market is expecting further increase of indicator to 1.9% in April.

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

 

Chart of day:

Chart 03-JunCheck also Euro Dollar History Graph.

EUR/USD was traded yesterday between levels 1.1218 down to 1.1140. Supported by ECB decision, currency pair tested resistance level at 1.12.

Clear break from 1.12 resistance 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 long term support at 1.082.

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 position.

Trade ideas 03-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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