EUR/USD Forecast and Trade Ideas for May 23 2016

Previous trading day:

Aside from FOMC meeting minutes, during previous couple of weeks we have seen increasing number of Fed officials voicing publicly June rate increase. New York Fed Chief Dudley is for now latest Fed official who joined June/July rate-hike club, after Atlanta Chief Lockhart, San Francisco Chief Williams, Boston Chief Rosengren and Kansas City Chief George. At this moment it could be said with high level of certainty that June rate hike is on a way. However, as Fed Dudley mentioned,  there are still concerns regarding outcome and potential impact of Brexit referendum, and in this sense June increase might be postponed for July. Just to note that Brexit is event marked with high level of risk both on G-7 meeting held last week in Japan and by International Monetary Fund.  Full consequences of Britain’s exit EU still cannot be completely estimated, and in this sense cautious approach of Fed officials might be seen as justified at this moment. As for results posted yesterday on US economy, existing home sales beaten market expectations reaching 1.7%, which is second month in a row with significant increase implying on rebound of housing market in US.

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Results posted on EU economy on Friday show significant increase in surplus of Euro zone current account to Eur27.3b during March, while Germany`s producer price index went to positive zone of 0.1% on a monthly basis, however still at -3.1% compared to previous year.

EUR/USD started previous trading day in relatively relaxed bullish mode, trading in a range 1.119 up to 1.1235.

List of results released during previous day are following:

EU results 20-MayProducer prices in Germany are increased in April for 0.1% compared to previous month. In line with deflation trend in Euro zone, Germany`s producer price index was following continuous down trend since middle of last year, reaching 0.0% m/m in March this year. Whether April`s increase imply on trend reversal is too early to conclude since there had not been any change in PPI of -3.1% on a yearly basis from previous months release.

Euro zone current account surplus for March is significantly increased to Eur27.3b from 19b posted previously. Such strong move was influenced by goods (Eur31.0b), services (Eur6.9b) and primary income (2.3b), while secondary income reached 12.9b.

US results 20-MayUS Existing home sales are continuing up trend, reaching $5.45m in April which is increase of 1.7% compared to previous month and above market expectation of 1.2%. After strong rebound during March of 5.1% US housing market is showing signs of recovery, however, absence of wages increases followed with rise in prices might influence future slow down of current trend.

 

DAY AHEAD:

EUR/USD Economic Calendar for today is following:

Fundamentals 23-MayMarket sentiment is going to be published today for Germany and Euro zone followed with US Manufacturing PMI, showing changes in current sentiment of business conditions. In general, market is expecting so see some quite modest improvements in business sentiment of both EU and US economies.

Euro zone Consumer Confidence will also be posted today, showing changes in sentiment of consumers for spending. Previously, index was standing at -9.3 while market is expecting to see quite modest improvement to -9.

Update on released results you can follow-up on Euro Dollar News and EUR/USD Economic Calendar.

Chart of day:

Chart 23-May

Check also Euro Dollar History Graph.

 

EUR/USD was trading in a relatively relaxed mode during Friday, moving in a range between 1.119 up to 1.1235, finishing week at level of 1.1221.

Strong support level at 1.12 is evident. Without strength to break it during previous week, currency pair modestly rebound to the level of 1.1235.

Next support level from 1.12 is standing at levels 1.13, 1.1390 and 1450 which is long term resistance level.

On the opposite side, next support levels are at 1.113, 1.104 down to 1.096.

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 20-MayFor long term EUR/USD forecast from investment bankers check Euro to Dollar Forecast

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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