EUR/USD Forecast and Trade Ideas for May 17 2016

Previous trading day

Yesterday was relatively calm day on FX markets, both regarding fundamentals and volume of trading. Certainly market is awaiting today’s quite exiting day considering that results on US CPI, IP and  real average weekly earnings are going to be posted. Inflation figures are closely monitored by FED at this moment and from its developments would depend further decision on strengthening of monetary policy. In other words, FED might increase its interest rates, which is event awaited by market participants since the beginning of this year. During previous two weeks we have seen increased number of FED voting members voicing June rate-hike, while yesterday, Richmond FED Chief Lacker also supported rate move. Today’s day is finishing with FEDs members Williams and Lockhart discuss US economy at Politico Event (18:00 CET). With no news on EU, currency pair was trading in very calm mode within 35 pips from 1.2999 to 1.134, finishing day at level of 1.1318.

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Results released during previous day are following:

US results 16 may

 

 

 

 

 

 

National Association of Home Builders Housing Market Index is quite modestly down to 57.3 in May from 58 previously posted. However, market was expecting to see some positive developments and index reaching 59.

March data on Net Long-Term Treasury International Capital flow show significant inflows in the US of 78.1b from 72.0b previously posted. Market was expecting to see some slowdown in flows to 27.4b.

 

 

DAY AHEAD

Fundamentals that will be released today are following:

Fudamentals 17 may

 

 

 

 

 

 

 

 

 

 

 

 

Today is promising to be very exciting day on FX markets starting from 14:30CET. There are several very important data on US economy that are going to be released. Most important fundamentals to watch today are following:

14:30 Consumer Price Index: data will be released both on monthly and yearly basis, including core inflation. Considering that this is one of several drivers of FEDs decision on strengthening monetary policy, any surprises on data might trigger significant market reaction. At this moment, market is expecting to see modest increase in CPI to 0.3% m/m and 1.1% y/y. Results posted for March were 0.1% m/m and 0.9% y/y. Core inflation on yearly basis was 2.2%, while market is expecting to see modest decrease to 2.1%. Just as an reminder, FEDs target inflation till the end of this year is 2%.

14:30 Real Average Weekly Earnings: this might be considered as another important indicator that is closely watched by Fed in context of overall developments in employment segment of US economy. Result for March showed increase in real earnings of 1.1% on a yearly basis.

15:15 Industrial Production: although IP is not so closely watched by market at this moment as CPI and earnings, still it is one of the important indicators providing significant input on the current state of US economy. Market is expecting to see some improvements in this segment, with IP reaching 0.3% in April compared to -0.6% posted for March.

On the EU side, Euro-Zone trade balance for March will be published, with market expectation to see some quite modest increase in positive balance of Eur 2b, total trade balance reaching Eur 22.0b

Chart of day:

Chart 17-May

Currency pair was trading during whole day in a very calm mode, moving in a range from 1.1299 up to 1.134, finishing day at level of 1.1318.

Short term resistance level is at 1.1390, while long term resistance is at 1.1450 which has been tested on several occasion during Y2015. Break of 1.1450 would open way for next long term resistance at 1.16 up to 1.20.

Break of short term support level at 1.13, would lead to currency pair testing next levels at 1.12 and 1.113.

 

Trading ideas for today:

Below are presented some trading ideas for today, based on technical analysis taking into account current level of currency pair and excluding overnight open positions.

Trade idea 17-May

 

 

 

 

 

 

If you don’t play on results, than it would be advisable to close your position before 14:30CET.

 

 

Disclamer: 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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