EUR/USD Forecast and Trade Ideas for June 24 2016

Previous trading day:

Britons decided to LEAVE European Union. After results financial markets plunged, where every asset class had been influenced. British pound and euro were significantly hit by this decision, as expected. Immediately after results EUR/USD reached 1.09 level, but shortly returned to levels around 1.11. British pound lost 11% in value during just one day. This was immediate market reaction, however, longer term consequences of this decision in terms of recession are to be seen and priced by market. As previously noted by OECD experts, it is expected that EU economy will plunge by 1% through Y2018. EU is already struggling to generate both growth and inflation, and the outcome of this referendum is not something that EU economy needed at this moment. On the other side, UK decision to leave made some analysts to impose a question on possibility that some other EU members might follow UK path, which is, at this moment, scenario that could additionally and significantly hurt euro further.

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List of results released during previous day are following:

EU results 23JunPreliminary June results for Markit PMI sentiment for German manufacturing show modest increase to 54.4, better from market estimate of 52 and above previous month result of 52.1. This is quite optimistic for German manufacturing industry. At the same sentiment for services unexpectedly dropped to 53.3 from 55.2 posted for May, and below market consensus at 55. However, Markit composite index fell to 54.1 from 54.5 posted previously, indicating that growth might not reach expectations for second quarter.

Euro Zone Markit PMI sentiment for manufacturing is quite modestly increased in June, as per preliminary results. Market estimate was standing at 51.4, while index was at level of 51.5 during May. PMI for services modestly decreased to 52.4 from 53.3 posted previously and below market consensus at 53.2. On the other side composite index fell to 52.8 from previous level of 53.1 indicating some slowdown in growth from expected during second quarter.

US results 23JunUS Initial Jobless Claims unexpectedly dropped to 259k during previous week, which is significant drop from 277k posted previously and 270k expected by market.

US New Home Sales dropped during May by -6.0% compared to previous month. Market was expecting to see drop of -9.5% considering extreme increase of 16.6% during previous month.

US Conference Board Leading Indicators index unexpectedly dropped for May for -0.2%, below market expectations at 0.1%. Result for previous month was standing at 0.6%.

US Markit Manufacturing PMI index increased during June to 51.4 from 50.7 posted for previous month and above market expectations at 50.9. Index rise was supported by production increase witch influenced more hiring within manufacturing industry.

 

DAY AHEAD:

EUR/USD Economic Calendar for today is following:

Fundamentals 24JunUS Durable Goods Orders: results for May will be released. Strong investment in durable goods of 4.9%m/m in January has been partially diminished with drop of -2.8%m/m in February. However, 3.4%m/m during April beaten every market expectation. Market is estimating some modest slowdown in durable goods orders of -0.5.%m/m in May.

University of Michigan Confidence for June will be released showing consumer sentiment changes in June from initially posted 94.3.

 

Chart of day:

Graph 24-JunCheck also Euro Dollar History Graph.

After British vote to leave, currency pair dropped to level of 1.09, but shortly returned to levels around 1.11. Whether this is going to be final new levels of EUR/USD after general market turmoil is to be seen within following couple of days. At this moment nobody can predict its path, due Brexit was one in time event with extraordinary influence on every asset class.

However, taking into account current level of 1.11, resistance levels are found at 1.113 up to 1.12, 1.1240 and 1.1320 as short term resistances. Next long term resistance is at 1.1450.

On the opposite side, support levels are at 1.105, 1.096 down to 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.

 

Trading idea 24JunFor 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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