EUR/USD Forecast and Trade Ideas for May 27 2016

Previous trading day:

Yesterday`s trading session currency pair started around levels of 1.1150, finishing day testing long term resistance at 1.12 after US data release on durable goods orders and pending home sales.

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Holding a speech in Washington, Fed Governor Powell expressed his view that US economy is on a positive track regarding economy segments closely watched by Fed members. He sees underlying growth  much higher than actually posted though figures. Although he is quite optimistic regarding future strengthening of US monetary policy, still Brexit is viewed as an event that needs cautions approach, implying on possibility for postponed Fed action to July meeting. Released data on US housing market are continuing to beat records and market expectations. After notable increase in new home sales of 16.7% posted on Tuesday, yesterdays data show raise in pending home sales of 5.1% in April, implying on increased confidence on economic outlook supported by raise in employment and wages, followed with low mortgage rates.

List of results released during previous day are following:

US results 26-MayInitial Jobless Claims significantly dropped during previous week for 10k, reaching 268k. Posted results are also below market expectations of 275k, signaling modest but continuous improvement of US labor market.  Such trend might be expected in future period following Dallas Fed President Kaplan comment on Wednesday, noting his expectation that unemployment rate will drop below 5%, heading to full employment.

Durable Goods Orders are significantly increased during April to 3.4% from 1.9% (revised figure) previously posted. Released figure is significantly above market expectations of 0.5%, implying on increased confidence in business outlook. Strong increase is mostly driven by jump in transportation equipment orders, which were up for 8.9% in April. Excluding transportation, all other industries gained 0.4% on a monthly basis.

Pending Home Sales are unexpectedly increased during April by 5.1% on a monthly, and 4.6% on a yearly basis, implying on definite rebound of US home market supported by all-time lowest mortgage rates. Market was expecting to see increase of modest 0.7% of number of sale contracts for previously owned homes after considerable jump in new home sales posted previously.

 

DAY AHEAD:

EUR/USD Economic Calendar for today is following:

Fundamentals 27-MayUS Gross Domestic Product: second estimation will be released for first quarter economic output. Initially released figures was 0.5% on a quarterly basis, while market is expecting first quarter GDP increased to 0.9% after revision.

Personal Consumption Expenditure: revised figure for first quarter will be released. Market is expecting to see quite modest increase in figure to 2.1%.

University of Michigan Confidence index on consumer sentiment will be released as final for May, with no expectations on any significant change in sentiment from previously released. Since the beginning of the year, UoM confidence index showed modest but continuous growth, with exception of April, where sentiment was quite modestly decreased to level of 89. However, initial figure for May exposed significant increase in consumer sentiment, reaching level of 95.8.

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

Chart of day:

Chart 27-MayCheck also Euro Dollar History Graph.

Yesterdays session currency pair started in relatively calm mode trading around previous day close at levels of 1.1150 up to 1.1190. Strong data released on US economy pushed currency pair to the levels of 1.121, and testing again 1.12 long term resistance level.

Break of 1.12 resistance level would lead to next resistances found at 1.13, 1.1390 and 1.1450.

On the opposite side, next support levels are at 1.113, 1.105 and 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.

Trading ideas 27-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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