EUR/USD Forecast and Trade Ideas for May 25 2016

Previous trading day:

Yesterday`s trading on FX market was driven by increased traders expectations on June/July Fed rate hike, as Philadelphia Fed Chief Hacker expressed his view on possibility of two or three rate increases during this year.  In light of expectations Dollar gained against all major currencies, followed with 0.6% against Euro, reaching levels of 1.1140.

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Fully unexpected result is posted yesterday for US new home sales, that beat any possible market expectation. Increase of 16.6% on a monthly basis has not been seen for previous 24 years. Taking into account further 1.7% increase in existing home sales posted on Monday, it implies on general rebound of housing market in the US and, most of all, increased confidence on the economic outlook. House price index is going to be released today, with expectations on its modest increase, which would be another economic development in support of Feds rate increase on a next FOMC meeting.

Released data confirmed German economic output for first quarter of this year to 0.7% on a quarterly basis supported by domestic demand on consumption and construction. On the other side ZEW survey on economic sentiment unexpectedly drop to 6.4 in May, expressing investors concerns on future business outlook in light of forthcoming Brexit referendum.

List of results released during previous day are following:

EU results 24-MayThere are no changes in German GDP figures for first quarter posted previously. It has been confirmed German growth of economic output of 0.7% q/q seasonally adjusted, 1.6% y/y working day adjusted and 1.3% y/y without seasonal adjustments.

Posted figures on ZEW survey for May show investors improved sentiment on current business conditions to 53.1 from 47.7 previously posted, and above market consensus at 49. However, for future period investor sentiment  unexpectedly dropped to 6.4, from previously posted 11.2, in light of forthcoming Brexit referendum. Due to same reason sentiment for Euro zone is also decreased to 16.8 from previous 21.5 level.

US results 24-MayAmazing result is posted today for US new home sales which has absolutely beaten any market expectations. Only during April new home sales reached  619k which is increase of 16.6% compared to previous month. In line with previously posted figures showing recovery of US housing market, market was expecting to see improvement also in new home sales, but modest 2%m/m from -1.5% drop in March.

DAY AHEAD:

EUR/USD Economic Calendar for today is following:

Fundamentals 25-MayGerman IFO sentiment will be released today on business climate, current assessment and expectations. Although market is not expecting to see almost any change in current business climate and assessment, in light of yesterdays released data on ZEW survey, there might be some surprises on downside with expectations, due to fears on future business outlook if Britain exit EU.

US Goods Trade Balance: results for April will be posted. Previously posted figure show some relaxation in US trade deficit to $-56.9b during March, however, market is expecting to see further deficit increase in April to $-60.1b.

Markit US PMI Services and Composite indexes will be released today with market expectations on modest increase of sentiment.

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

 

Chart of day:

Chart 25-MayCheck also Euro Dollar History Graph.

Traders speculation on Jun/July rate increase influenced further strengthening of US currency to levels of 1.1140, from levels of 1.1220 traded during previous three days.

Strong support level at 1.12 is breached, with EUR/USD heading toward 1.113 as next support level. Further levels on downside are found at 1.105 and 1.096.

On the opposite side, next resistance levels are at 1.12, 1.13 and 1.1390.

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.

Trading idea 25-May

For 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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