EUR/USD Forecast and Trade Ideas for June 27 2016

Previous trading day:

Friday`s trading session was marked with extreme market volatility after Britons vote to leave European Union. Currency pair finished week at level of 1.11 after reaching level of 1.09. Some analysts are anticipating that Brexit might influence further quantitative easing to be introduced by ECB during course of this year, mentioning September meeting. Majority of analysts are seeing further decrease of interest rates, followed with option for extension of asset purchase program. Although this might be possibility, it is still too early to jump into any conclusions regarding next ECB moves. Economists from German DIW Institute commented on possibility for Euro Zone economy to be dragged again into deflation as well as zero interest rates for long period of time, supported by weak economy and drop in oil prices.

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Relatively weak durable goods orders posted for May and slowdown in manufacturing due to weaken global demand, are increasing probability that Fed will not consider to raise interest rates during July meeting. In addition, due to high level of uncertainty on general impact of Brexit referendum on US economy there is also decreased probability that Fed will raise interest rates during course of this year.

List of results released during previous day are following:

EU results 24JunGerman IFO sentiment unexpectedly improved for June. Current assessment index showing present sentiment on business conditions reached 114.5 points in June, up from 114.2 posted previously and above market consensus at 114. Expectations index, showing sentiment on future prospectus of business conditions jumped to 103.1 from 101.6 posted previously. Index is above market estimate of 101.2. Sentiment on business climate is increased to 108.7 from 107.7 released previously and also above market consensus at 107.4.

US results 24JunUS Durable Goods Orders dropped by -2.2% in May, significantly below market estimate at -0.5%. 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, reverting back with 3.4% in April. Durables without transportation are down for -0.3%. Economists are in agreement that global growth slowdown and uncertainty over economic developments had impact on companies decision on investments, as capital goods orders fell by -0.7%, although it was expect to grow. This further might imply on US growth slowdown during second quarter of this year.  Economist are seeing equipment goods investment to be the major driver of growth for next quarter.

University of Michigan Sentiment is modestly decreased in June to 93.5 points from 94.3 posted previously and below market estimate of 94.1.

 

DAY AHEAD:

EUR/USD Economic Calendar for today is following:

Fundamentals 27JunUS Goods Trade Balance: results for May will be released. US started this year with further increase in trade deficit reaching $-62.23b in January. However, during following months, trade deficit has been modestly decreased to $-57.53b during April. Current market expectations are on side of modest increase of deficit during May to $-59.0b.

US Markit Services PMI: preliminary June results will be released showing changes in PMI sentiment for services. During the course of this year Markit services index was moving above 50, except in February when sentiment was switched to negative reaching 49.7. During May index was standing at level of 51.3 points, while market is expecting its further increase during June to level of 51.9.

Chart of day:

Chart 27-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, where EUR/USD finished last week.

Next significant resistance levels, from current 1.11, can be found at 1.113, 1.12, 1.1240 up to 1.1390 as short term resistances.

On the opposite side, next support levels are at 1.105, 1.096 witch currency pair tested on Friday, 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.

Trade idea 27JunFor 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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