EUR/USD Forecast and Trade Ideas for May 26 2016

Previous trading day:

Currency pair started previous trading day in calm mode, with quite modest bullish trend, moving in a range of some 30 pips between levels of 1.1129 up to 1.1164. Yesterday`s trading day was much more focused on oil prices and stocks than on currency market.

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Dallas Fed President Kaplan held speech at Greater Houston Partnership providing his view on economic developments in US, mostly confirming what was previously said by other FED presidents. Fed Kaplan noted that slow and gradual normalization of monetary policy can be expected in the future. He is also expecting further improvement of US labor market with unemployment rate below 5% heading to full employment.

List of results released during previous day are following:

EU results 25MayIndex released by IFO Institute for Economic Research on economic activity in Germany shows increased sentiment  on industry and trade. Business climate index is increased to 107.7 in May from 106.6 posted for April, supported mostly by capital goods manufacturers, followed with improvement in wholesale and retail trade, while sentiment in construction industry rose at most highest pace since 1991, as noted by IFO Institute. This might be treated as quite interesting result if we take into account that preliminary ZEW survey released for May on Tuesday exposed significantly decreased sentiment both on current and future business conditions. One of the major differences between two sentiment indicators is that IFO includes in survey industry professionals, while ZEW survey relies on opinion of financial professionals. Based on posted results, it seems that financial professionals are perceiving forthcoming Brexit referendum as higher threat to German economy than it is seen by professionals from industry area.

US results 24MayUS Goods Trade Balance surprisingly dropped in April to $-57.53b from $-56.9b posted for March. Figure is modestly better from market consensus, considering that it was expected further deficit increase to $-60.0b.

US Housing Price Index increased by 0.7% compared to previous month. Posted figure is above market expectations at 0.5%, but eventually in line with general rebound of US housing market.

Markit US PMI sentiment unexpectedly dropped in May. PMI Services index is down to 51.2 from 52.8 in April. Result is also below market expectations of 53.0. At the same time PMI Composite is down to 50.8 from 52.4 previously posted.

DAY AHEAD:

EUR/USD Economic Calendar for today is following:

Fundamentals 26-MayWith no data release on Euro zone or German economy, indicators that will be released today for US are following:

Initial Jobless Claims for previous week are going to be released today with market expectation for further, quite modest, decrease to 275K from 278K posted previously.

Durable Goods Orders: after significant drop of -2.8% in February, market is expecting to see further increase in goods orders to 0.4% in April, after raise of 0.8% posted for March.

Pending Home Sales: after significant increase in home sales posted previously, market is expecting some decrease to pending home sales to 0.7% on a monthly basis compared to 1.4% posted previously.

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

 

Chart of day:

Chart 26-MayCheck also Euro Dollar History Graph.

Currency pair started previous trading day in calm mode, with quite modest bullish trend, moving in a range of some 30 pips between levels of 1.1129 up to 1.1164.

Support level at 1.113 has been tested during last two trading days. Break of 1.113 would lead to next support 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 26-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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