EUR/USD Forecast and Trade Ideas for June 16 2016

Previous trading day:

Fed rate is unchanged at 0.5% during yesterday`s FOMC meeting. Fed Chair Yellen noted that inflation is moving in expected direction implying that 2% target might be reached during this year. She also noted that Fed is currently looking closely to inflation trend and might react on inflation expectations, also commenting on possibility of July rate hike. However, on a long turn Fed is quite uncertain where interest rates are heading. Yellen is expecting for jobs to slow and noted that recent payroll data has been low. Brexit is still seen as threats to world economy, and is factored in FOMC decision.

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List of results released during previous day are following:

EU results 15JunEuro Zone Trade Balance surplus increased during April to Eur28.0b from Eur22.3b previously posted, and significantly above market estimate at Eur21.5b. Non-seasonally adjusted trade surplus was standing at Eur27.5b during April.

US results 15JunUS Industrial Production is down for -0.4% in May, as per released data, above market expectation at -0.2%. During April industrial production has been increased by 0.6%m/m.

US Capacity Utilization is modestly decreased during May to 74.9% from 75.4% posted previously and below market expectations at 75.2%.

After significant increase in MBA Mortgage Applications of 9.3% during week before, applications dropped for -2.4% as of week of June 10th.

US Producer Price Index is increased during May for 1.0% on a monthly basis, below market consensus at 0.3%. On a yearly basis PPI reached again negative territory with -0.1%, which is drop from 0.0% in April, but in line with market expectations.

DAY AHEAD:

EUR/USD Economic Calendar for today is following:

Fundamentals 16JunEuro Zone Consumer Price Index: results for May will be posted on a monthly and yearly basis. Deflation trend within Euro Zone is still evident even with extensive stimulus program of Eur1.74 trillion imposed by ECB aimed to generate growth and inflation. ECB latest projections show inflation reaching targeted close to 2% within Y2017 and 2018. During April CPI was standing at 0.0% on a monthly and -0.2% on a yearly basis, with core inflation at 0.8%y/y. Market is expecting Euro Zone inflation in May to reach 0.3% on a monthly and -0.1% on a yearly basis without any change in core inflation.

US Current Account Balance: data for first quarter of this year will be released. As of 3rd quarter of last year current account deficit has been increased to $-124.1b and further to $-125.3b as of the last quarter. For 1Q of this year market is expecting modest slowdown in deficit of $-124.3b.

US Consumer Price Index: results for May will be posted on a monthly and yearly basis. US inflation started picking up modestly as of the second quarter of this year. April CPI was standing at 0.4%m/m and 1.1%y/y. Taking into account previously released data on wage and sales increase, market is expecting further CPI increase during May of 0.3% m/m, with no changes on a yearly basis.

NAHB Housing Market Index: results for June will be released. Since February this year index on sentiment for sales of new homes at present and within six months time has been unchanged at 58. However, for June market is expecting some modest increase in index to 59.

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

 

Chart of day:

Chart 16JunCheck also Euro Dollar History Graph.

Currency pair was trading yesterday in a range from 1.119 up to 1.1296, supported by FOMC rate decision. Support level at 1.12 has been tested. After FOMC decision EUR/USD headed toward 1.13 resistance level, which has not been tested during yesterday’s trading session.

Break from 1.13 short term resistance level would lead currency pair to next level at 1.1390 up to 1.1450 which is long term resistance level.

On the opposite side, break of 1.12 support would lead to next levels at 1.113 down to 1.105.

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 16JunFor 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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