EUR/USD Forecast and Trade Ideas for May 18 2016

Previous trading day:

Data released for US CPI are fully in line with market expectation of 1.1% on a yearly basis with core inflation of 2.1%. Considering that these levels are already priced, there had not been any significant reaction on market. However, day ahead is bringing release of FOMC Minutes from April meeting, which is another important event that market will closely monitor. In case that Minutes reveal some major points of the meeting not communicated previously, market adjustment of current USD levels might be expected. At the end of day Fed`s Williams and Lockhart held economy discussion at POLITICOs event. Fed`s Lockhart noted that external developments are still closely monitored by FED and its potential spillover effect on US economy. This further imply question whether next rate increase might be postponed after Brexit referendum take place in UK? As per Fed`s Kaplan, Brexit is going to be one of the topics on June FOMC meeting.

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Results posted on EU economy are showing modest increase in trade surplus of Eur1.9b, reaching total Eur22.3b in April from Eur20.6b released for March. Without any surprises on released results from expected, EUR/USD was trading within range of 45 pips from 1.13 up to 1.1345, finishing day at level of 1.1313.

List of results released during previous day are following:

Eu results 17-May

Posted Euro-Zone trade balance seasonally adjusted of Eur22.5b is almost fully in line with market expectation of Eur22.0b. Result is also modestly better from Eur20.6b released for March.

US results 17-May

Released US Consumer Price Index for April was fully in line with market consensus. CPI of 0.4% in April led to 1.1% on a yearly basis. Posted figures, together with core inflation of 2.1%, indicate high possibility that FEDs target of 2% for this year might be reached. Such developments are going in support to previous comments from several FED officials that US economy is moving in expected direction and in this sense some near-future strengthening of monetary policy might be expected.

April results are also showing some modest but positive developments within US industrial production that jumped to 0.7% from -0.9% in March. On the other side, real average weekly earnings are down to 0.2% on a yearly basis from 1.1% posted previously. Such developments, taken in context of previously posted drop in employment, might indicate that US labor market still need some time to reveal actual trend.

DAY AHEAD:

EUR/USD Economic Calendar for today is following:

Fundament 18-May

Although there is going to be relatively small number of results released today, there are two events that markets will be mostly focused on:

11:00 Euro-Zone Consumer Price Index: results will be released both on monthly and yearly basis, followed by core inflation figures. This is one of important indicators to watch considering that ECB is struggling with deflation trend for relatively longer period of time, and had implemented considerable monetary measures, including negative rates, in order to revert inflation trend. Market is not expecting to see any significant changes in CPI figures from March levels.

Another important event to watch is release of Minutes from FOMC meeting held on April 26-27, which will occur at 20:00CET. In case of any new meeting points, not already communicated, it could be expected significant reaction from market expressed through price movement.

Chart of day:

Chart 18-May

Without any surprises on fundamentals, currency pair was trading within range of 45 pips from 1.13 up to 1.1345, finishing day at level of 1.1313.

Trades during last couple of days revealed strong support level at 1.13. Break of 1.13 would lead to currency pair testing next levels at 1.12 and 1.113.

From 1.13 support, next 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  Euro to Dollar Forecast

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 ideas 18-May

 

 

 

 

 

 

 

 

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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