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EUR/USD Daily Forecast – Fiber Consolidating Ahead of Italian GDP, CPI & PPI Figures

Finally, the downtrading Euro pair found support near 1.1125 levels today. Greenback drops slightly reaching 98.15/10 levels as Trump imposes tariffs on all goods that come into the US from Mexico.
Nikhil Khandelwal

tarting near 1.12 top levels on Monday, the EUR/USD pair faced severe pullbacks throughout the week. Most of the gains accumulated over last week period drained off with poor German and Eurozone reports. The plunge rally appeared to pause a bit since North American session of May 29. The pair maintained a range-bound approach sustaining within 1.1120/40 levels. Fiber continued to follow the same behavior even in the Asian trading session.

In the EU elections, the Populists and the Liberals won over the mainstream parties. The lead of the Brexit Party or anti-European Party is something which must have impacted the EUR/USD pair movements. It was quite surprising seeing the Fiber’s actions without discounting the painful win of the Eurosceptic parties. However, traders are recommended to keep their positioned hedged to any sudden drop in the Fiber.

Renewed concerns over Italy’s debt crisis kept the pressure on the market intact. Earlier the week, the EU had asked Italy for an explanation over their high level of debt. Italy’s reply read that any changes in the budget would further delay their recovery process.

Meanwhile, the US Dollar Index was six pips down in the morning session reaching near 98.15/10 levels. The plunge came in after news revealed US President Trump’s latest tariffs on Mexico. In a tweet, the President mentioned that from June 10, the US would apply a 5% tariffs on all the goods coming from Mexico. He also added that the tariffs would increase over time until the illegal immigration problem is sorted out.

A few moments ago, the German MoM Retail Sales figures reported -0.2% over 0.1% estimates.

EUR/USD Impacting Events

Today Italy would release its GDP, CPI & PCE figures. Traders sit tight and have a closer watch for these significant events.

Meantime, the Swiss Federal Statistical Office will issue the monthly YoY Retail Sales for Switzerland. The market expects the Swiss Retail statistics to come near 1% over the previous negative numbers. At 08:00 GMT, the Italian GDP (Both YoY & QoQ) would appear on screens. And, the market expects this GDP to remain in-line with the prior figures. In the European Session, the Destatis will publish the May YoY HICP. The consensus estimates the number to come near 1.4% to the previous 2.1%. This Harmonized Consumer Price Index data might significantly impact the EUR/USD pair.

On the USD side, few economic events with moderate importance would come out. First, Personal Spending for April, the market expects this report to come bearish. Second, the Core PCE Price Index (Both YoY & MoM) would appear on the economic calendar. The market anticipates the YoY report to come near 1.6%, and the MoM report to go around 0.2%. Thirdly, the April MoM Personal Income report, the Street analysts awaits this report to record higher figures, near 0.3% this time. Fourthly, the Chicago PMI and the Michigan Consumer Sentiment Index will release. Over these indexes the consensus estimates the Chicago PMI to go bullish and 1.1% high this time. Whereas, they expect the Michigan index to appear bearish on the currency.


Technical Analysis

EURUSD 60 Min 31 May 2019

Fiber had shown active downtrend motion moving along the lower vicinity of the Bollinger Bands (BB) in the last few sessions. Since yesterday, the pair appeared to keep showing signs of willingness to jump above the EMA of the BB. Unfortunately, the pair failed at every attempt and slid back to the lower part in the next moment. The width of the BB was quite contracted, resembling low volatility in the pair’s future movements. The RSI was looking north, indicating 50 levels or neutral market stance. Nearest resistance stands at 1.1140 levels while previous support point lies at 1.1120 levels. Since the pair is already at the bottom, there remains more space on the upside. Hence, traders must be ready for any upward movement in the pair in the upcoming sessions.

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