EUR/USD Forecast and Trade Ideas for May 30 2016

Previous trading day:

Friday`s trading was marked with bearish session supported by speech held by Fed Chair Yellen. Currency pair started day testing short term resistance at 1.12, finishing week some 100 pips lower at 1.1115.

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Although during previous weeks we have seen several Fed officials commenting potential strengthening of monetary policy during June/July meetings, latest one came from Fed Chair Yellen, holding a speech at Harvard university on Friday. She noted that it is suitable for Fed to “ gradually and cautiously” further increase overnight interest rate “in the coming months”. She was quite positive regarding current improvement of US economy and very optimistic on future growth, especially within labor market segment. Her statements were perceived positively by market implying on increased probability of rate hike during June or July meeting, which influenced US Dollar to trade around 1.111 levels. Revised estimate for US gross domestic product posted on Friday show increase of 0.8% compared to previous quarter, and higher from 0.5% posted as initial estimate. Although estimate is still quite lower from 1.4% posted for fourth quarter of last year, it still implies on modest growth of US economy.

List of results released during previous day are following:

US results 27-MaySecond release of annualized US Gross Domestic Product show increase of 0.8% for the first quarter of this year, from 0.5% posted as first estimate. Although figure is slightly below market consensus at 0.9%, and from 1.4% q/q posted for fourth quarter of last year, it still shows modest growth of US economy.

US Personal consumption expenditure is increased by 1.9% on a quarterly basis, without any change from first estimate. Figure is modestly below market consensus at 2.1%. As of the end of fourth quarter of last year, PCE was standing at 2.4% q/q.

There has not been any change in US Gross Domestic Product price index of 2.1% on a quarterly basis, which is fully in line with market expectations. As of the end of the fourth quarter of last year, indicator was at 1.3%.

Posted result on University of Michigan confidence show modestly decreased consumer sentiment to 94.7 in May, down from 95.8 initially released. Although posted figure is modestly down also from market expectations at 95.5, it is still better from April sentiment of 89.

 

DAY AHEAD:

EUR/USD Economic Calendar for today is following:

Fundamentals 30-MayDue to holiday in the US, there will be no data releases on US economy today. Euro zone results are much more focused on business and consumer sentiment indicators, where market is expecting to see quite modest sentiment improvement on business side, without any change in consumer confidence from previously posted data.

German Consumer Price Index will be released today on a monthly and quarterly basis. From the beginning of the year, German, same as Euro-zone, CPI figures has been relatively volatile moving closely, but still above zero on a yearly basis. During April yearly inflation dipped to -0.1%. Currently market is expecting to see reversal of CPI to levels before April, reaching 0.1% y/y, supported by monthly inflation of 0.3%.

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

 

Chart of day:

Graph 30-May

Check also Euro Dollar History Graph.

Fridays trading session started with currency pair testing short term resistance level at 1.20, but with bearish sentiment. Supported by comments of Fed Chair Yellen on potential Fed move during June/July meetings, currency pair finished week heading toward next short term support at level 1.11.

Break of 1.113 and 1.11 support would lead to next support levels found at 1.105 down to 1.096 and 1.082 which is long term support level.

On the opposite side, short term resistance levels are at 1.12, 1.132 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.

Trade idea 30-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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