EUR/USD Forecast and Trade Ideas for May 31 2016

Previous trading day:

With holiday in the US yesterday was relatively calm day on EUR/USD market with currency pair trading within range of some 40 pips from 1.11 up to 1.114.

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Today is going to be one of interesting days with respect to fundamentals. Large number of important economic data will be released both on US and EU economies including German and EU unemployment rate followed with US core PCE. However, most important at this moment is going to be release of Euro-zone inflation figures, in light of forthcoming ECB policy meeting on Thursday. Whether ECB had managed to finally revert deflation trend through its extensive policy measures, is to be seen, but for the moment, introduction of any new measures or change of current rates at forthcoming meeting is not expected by market.

List of results released during previous day are following:

EU results May 30German Consumer Price Index rebound during May to levels before April result, reaching 0.1% compared to same period of last year. Monthly CPI reached 0.3%, significantly up from -0.4% m/m during April. Both results were fully in line with market expectations. Whether this rebound during one month might be treated as reversal of deflation trend and first sign of positive results of ECB measures imposed, is just too early to be concluded at this moment.

There has not been much change in Euro-zone economic, business, industrial and consumer sentiment during May, compared to previous month, however, services confidence is modestly down to 11.3 from 11.7 posted previously.

DAY AHEAD:

EUR/USD Economic Calendar for today is following:

Fundamentals 31-MayGerman Retail Sales: results for April will be released both on monthly and yearly basis. After strong output in January of 0.7%m/m, German retail sales reverted to down trend in February, reaching -0.4%m/m followed with March with -1.1%. Market is expecting rebound of sales to 0.9% in April. Compared to same period of last year, retail sales reached 0.7% during March.

German Unemployment Rate: May data will be released with market expectation of no change in rate from previous release. Unemployment rate in Germany is relatively stable for a longer period of time. During whole Y2015 rate was around 6.4%, while since January this year it modestly dropped to 6.2%.

Euro Zone Unemployment Rate: results for April will be released with market expectation of no change from previous month.  Since Y2015 Euro zone is on steady but continuous unemployment down trend, reaching 10.2% during March.

Euro Zone Consumer Price Index is currently one of the mostly watched indicators for Euro zone considering monetary measures introduced by ECB in order to cope with deflation trend. Minutes of ECB policy meeting revealed its members expectations that inflation will dip again into negative territory during this year, before it finally revert trend and reach targeted close to 2% during year 2017 and 2018. Previously released CPI was standing at -0.2%y/y, while market is expecting to see it at level of -0.1% during May.

US Core Personal Consumption Expenditure: results for April will be released both on a monthly and yearly basis. Market is expecting quite modest change in core PCE of 0.2% on a monthly basis from previous 0.1%, and no change on a yearly basis from previously released 1.6%.

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

Chart of day:

Chart 31-MayCheck also Euro Dollar History Graph.

 

Yesterday currency pair was trading in a relatively calm mode within some 40 pips from levels 1.11 up to 1.114. Short term resistance level at 1.113 has been tested.

Break of 1.113 and short term 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, next short term resistance  levels are at 1.12, 1.1320 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 31-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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