EUR/USD Forecast and Trade Ideas for June 21 2016

Previous trading day:

Yesterday’s Asian bullish trading session influenced US dollar to open lower from previous day close, at level of 1.1380. Such move was supported by news on British referendum poll on side of Britons would not leave EU. This week will be marked with Brexit and some increased market volatility will occur as reflection of market sensitivity to any news regarding referendum outcome. It can also be expected that fundamentals will be more or less neglected during this week. It has been estimated that US financial industry will be mostly hit by Britons exit vote, as well as few other US large international corporations with business in London. As for US economy, Minneapolis Fed Chair Kashkari noted that Britons exit would have “moderate direct effect”, avoiding commenting on how many rate increases might be expected by Fed during this year. However, he noted that in case of higher Brexit impact, Fed might use all policy measures at disposal to diminish negative effects on economy.

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Organization for Economic Corporation and Development estimated EU drop in growth by 1% through Y2018, if Britons vote to leave.  At this moment it could be treated as significant impact on EU economy considering its extensive quantitative easing program introduced by ECB to cope with deflation and generate growth. Regardless of Brexit, German Bundesbank already announced expectations of German economy growth slowdown till the end of this year, after strong output of 0.7% during first quarter. It is still expected that growth will be generated mostly through domestic demand, same as during first quarter, diminishing to some extent weaken demand from emerging markets including China, Brazil and Russia.

List of results released during previous day are following:

EU results 20JunGerman Producer Prices are increased by 0.4% on a monthly basis during May above market expectations of 0.3%. However, on a yearly basis PPI is still in a negative territory reaching -2.7% during May, but better than -3.1% posted for April and higher from market estimate at -2.9%.

Euro Zone Construction Output is continuing slowdown trend with -0.2% m/m drop during April, reaching -0.4% compared to same period of last year. This is significant drop in construction, from 0.5% y/y posted for March.

DAY AHEAD:

EUR/USD Economic Calendar for today is following:

Fundamentals 21JunGerman ZEW Survey: results for June will be released showing sentiment of institutional investors on current situation and within next six months. During May sentiment was significantly increased reaching 53.1 from 47.7 posted for April. On the other side, economic sentiment dropped  to 6.4 during May from 11.2 in April due to investors concerns over Brexit outcome. Market estimate almost no change in index showing current situation while economic sentiment is expected to drop further to 4.8 for June.

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

 

Chart of day:

Graph 20JunCheck also Euro Dollar History Graph.

Previous trading session currency pair started above short term resistance level at 1.13 switching it to current support line. EUR/USD was traded between levels of 1.1380 down to 1.13.

If during following days clear break of 1.13 resistance level occur, than currency pair would move to next short term resistance at  1.1320 further to 1.1390 and 1.1450 which is long term resistance level.

On the opposite side, next support levels are found at 1.1240, 1.12, down to 1.113 which has been tested on Thursday last week.

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.

Trading idea 20JunFor 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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