EUR/USD Forecast and Trade Ideas for May 16 2016

Previous trading day

Data released for US Retail sales of 1.3% for April significantly outperformed market expectations at 0.8% and are much better from -0.4% posted for previous month. Unexpected strong move in retail sales, taken into account together with increase in wages, employment and inflation posted previously is now heating market expectations on possible near-term Fed rate hike. US Dollar gained almost 0.7% against Euro after data release. Currency pair was trading in a range from 1.1375 down to 1.1280, finishing week at level of 1.1308.

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Germany is continuing trend of modest but steady growth. GDP figures posted for first quarter show increase of economy output by 1.3% compared to same period last year and 0.7% on a quarterly basis. Posted figures are also slightly above market expectations. On the other side, although Euro-Zone economy is showing quite modest growth, posted figures underperformed market expectations. Released GDP for Euro-Zone for first quarter of this year is 0.5% q/q and 1.5% y/y. Deflator trend is still ongoing issue for EU economy mostly due to drop in oil prices, as posted German CPI for April is showing continuing down trend reaching -0.4%, down from -0.2% during March. On a yearly basis CPI stayed at same level of -0.1% which was fully in line with market consensus. Just as a reminder, Euro-Zone preliminary inflation rate in April was -0.2%.

Results released during previous day are following:

EU results 13 May

 

 

 

 

 

 

German gross domestic product seasonally adjusted grow by 1.3% on a yearly basis during first quarter of this year, and 0.7% on a quarterly basis, slightly above market consensus. At the same time posted Euro-Zone GDP showing some modest increase of 0.5% on a quarterly and 1.5% on a yearly basis, and are both below market expectations and previously posted results.

German Consumer Price Index is continuing deflator trend reaching -0.4% in April compared to previous month. Compared to same period of previous year, German CPI stayed at level of -0.1% same as in March.

 

US results 13 May

 

 

 

 

 

 

 

 

 

 

 

 

US Advance Retail Sales figures posted for April significantly outperformed market expectations reaching 1.3% from expected 0.8%. Figure is also considerably better from -0.4% posted for March. Such strong move is heating market expectations on near-future Fed rate hike.

Positive expectations on US economy are also coming from University of Michigan sentiment. Consumer confidence for May is significantly increased for almost 6 points to 95.8 from 89.0 previously posted. Figure is also above market expectations at 89.5.

 

 

DAY AHEAD

Fundamentals that will be released today are following:

Fund for 16 May

 

 

 

 

 

 

Day ahead is going to be relatively calm day concerning fundamentals. There are no releases related to  Euro-Zone economy while US indicators that are going to be published today are currently with lower level of significance for market and especially traders on FX market.

Empire Manufacturing survey should provide some business sentiment of New York manufacturers. Forecast is at 7 while previously posted result is at 9.56.

National Association of Home Builders is going to release its Housing Market Index for May showing sentiment on sales of new homes at present and within six months time. Market is not expecting some significant change in index from previously posted 58.

March data on Net Long-Term Treasury International Capital flows in the US will be released today, where market is expecting to see decrease from previous month in TIC inflows, reaching $27.4b.

Chart of day:

Chart 16 May

 

Currency pair continued down trend during Friday, moving in a range from 1.1375 down to 1.1280, finishing week at level of 1.1308. After testing long term resistance level at 1.1450 on Wednesday, currency pair reverted trend heading to test short term support at 1.13. Next short term support level is 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.

16 May Trad idea

 

 

 

 

 

 

 

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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