EUR/USD Forecast and Trade Ideas for May 24 2016

Previous trading day:

In lack of any significant results closely watched by market, yesterday was another relatively relaxed day for EUR/USD with currency pair moving in a range of some 50 pips, from levels 1.1189 up to 1.1239.  Updates on current Fed view on economic outlook and potential next move in policy are provided from two Fed officials. St. Louis Chief Bullard expressed his opinion that keeping rates too low for a longer period of time might imply potential financial instability, noting that US is not in that situation for the moment. He also noted his expectations that positive current developments on labor market might influence future raise in inflation, and in this sense, supporting rate increase at this moment. On the other side, San Francisco Fed Chief Williams had been much more specific expressing his views, commenting even future Brexit referendum, but it must be kept in mind that this year Fed Williams does not have voting right. He noted that rate increase will be on a table for June, but still leaving the option for July, considering timing of Brexit. Although he is not expecting to see some significant influence of referendum on US economy, however, he noted Fed`s option for interest rate reduction in case of any negative developments.

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List of results released during previous day are following:

EU results 23-MayAll three Markit indexes for Germany on Manufacturing, Services and Composite are improved compared to previous month and slightly above market expectations, implying on general sentiment on improved business conditions which is positive for German economy. At the same time released data for Euro zone are showing modest decrease both from previous month data and market expectations. However, indicator for EU is still above 50 implying on general positive economic activity developments.

Euro zone consumer confidence index is modestly improved to -7 in May from -9.3 posted previously and slightly better from market consensus at -9.

US results 23-MayMarkit sentiments on US Manufacturing is quite modestly down in May to 50.5 from 50.8 posted previously and for 0.5 points lower from market consensus.

DAY AHEAD:

EUR/USD Economic Calendar for today is following:

Fundamentals 24-MayGerman Gross Domestic Product: revised figures for first quarter of this year are to be released today, however, market is expecting confirmation on previously posted figures. German growth of economic output for 1Q was 0.7% q/q seasonally adjusted, 1.6% y/y working day adjusted and 1.3% y/y without seasonal adjustments.

German ZEW Survey: figures on Current Situation and Economic sentiment will be posted showing sentiment of institutional investors on current situation and for the period of next six months. Market is expecting to see increase in current sentiment to 49. In addition, ZEW Economic sentiment for Euro zone is also going to be released today, with market expectations for modest improvement.

US New Home Sales: results for April will be posted. In line with general improvement in US housing market during last two months, market is expecting to see growth also in new home sales in US to 521K from 511K previously posted, or expressed as a monthly change 2.0% compared to -1.5% in March.

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

 

Chart of day:

Graph 24-MayCheck also Euro Dollar History Graph.

Without release of significant results that market is currently closely watching, currency pair was traded in a range of some 50 pips, moving between  1.1189 up to 1.1239 levels.

Strong support level at 1.12 is evident. Without strength to break it during previous week, currency pair modestly rebound to the levels of 1.1230.

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 24-MayFor 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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