EUR/USD Forecast and Trade Ideas for June 07 2016

Previous trading day:

Fed Chair Yellen was holding a speech in Philadelphia yesterday, providing some valuable information on current state of US economy and potential future Fed actions, on a first place, widely expected increase of interest rates. With respect to potential near-future strengthening of monetary policy, she has noted that gradual rate increase might occur only if conditions are met.  Aside from GDP growth, other two Fed policy targets are set to be reaching full employment and inflation of 2% as of yearend. With CPI reaching 1.1% in April and increase in wages and spending, there is high probability that 2% inflation target will be reached. On the other side, labour market figures have been quite mixed, with unexpected drop in nonfarm payrolls to only 38k during May. Fed Chair Yellen commented that labour market data needs careful attention and found payroll data “disappointing”, however seeing other labour market data as more positive. She concluded that there are much more positive economic developments than negative in US economy.

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List of results released during previous day are following:

EU results 6JuneGerman Factory Orders unexpectedly dropped for -2% during April on a monthly basis after relatively strong output of 1.9% posted for March. Since the beginning of this year factory orders have modestly slowdown reaching -0.1% in January and -1.2% in February. Slowdown trend in mostly evident on a yearly basis, with factory orders reaching -0.5% compared to same period last year, down from 1.7 % posted previously. Released data are also significantly below market consensus.

Market PMI index for Germany Retail is significantly improved during May reaching 54.0 from 51.0 previously posted.

Euro Zone Markit PMI Retail is also improved passing level of 50 during May with index reaching 50.6 from 47.9 posted previously. Markit index above 50 is indicating on increased retail confidence within Euro Zone.

Euro Zone Sentix Investor Confidence for June reached 9.9 which is significant improvement from 6.2 index value during May and also above market expectations of 7.0.

US results 6JuneUS Labor Market Conditions Index decreased to -4.8 in May, down from -3.4 posted previously. Index is also significantly lower from market estimate of -0.8.


EUR/USD Economic Calendar for today is following:

Fundamentals 7JunGerman Industrial Production: results for April will be released on a monthly basis. After strong industrial output in January of 3.3% m/m, German IP modestly dropped during February to -0.5%m/m and March to -1.3%.  Market is expecting to see some improvement in German IP during April of 0.7% on a monthly basis and 1.0% compared to same period of last year. During March IP is increased for modest 0.3% y/y.

Euro Zone Gross Domestic Product: third estimate and final results for first quarter will be released. GDP under second estimate was 0.5% on a quarterly basis and 1.5% on a yearly basis. Market is not expecting any change from previously released data.

US Nonfarm Productivity: final results for first quarter will be released with market expectations on modest improvement of indicator to -0.6% from -1.0% previously posted.

US Unit Labor Cost: final results for first quarter will be released. Market is expecting quite modest change in indicator to 4.0% from 4.1% previously released.

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


Chart of day:

Chart 7JunCheck also Euro Dollar History Graph.

After Fridays strong move to levels of 1.1360 supported by weak nonfarm payrolls data release, currency pair was moving in a range of some 70 pips on Monday, between levels 1.1392 down to 1.1325. Short term support level at 1.1320 has been tested. Without strength to break it, currency pair reverted toward short term resistance level at 1.1390 which has also been tested during yesterday’s trading session.

Next resistance level from 1.1390 is long term resistance at 1.1450 and further 1.16 .

On the opposite side, short term support levels are at 1.1320  and 1.12.

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 7June

For 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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