Last Friday, the Euro moved lower after few dovish remarks by the European Central Bank. For the past few months, and due to many factors, the EUR/USD was mainly bearish; and might continue its downward trend to break below 1.2300.
At the moment, the EUR/USD is in a critical support level trading between 1.2350 & 1.2400. However, this won’t be the case for long, as there are major data releases that are expected to cause high volatility in the Forex market.
Technically speaking, the single pair broke below the trend-line for the upward movement which indicates that there is a chance for a further move downwards towards 1.2357 and 1.2310.
The European pair might touch levels below 1.2290- 1.2235 at the major trend-line connecting the 2010 and 2012 lows.
Here are the major Resistance (R) & Support (S) levels of the EUR/USD:
S2 1.2310
S1 1.2350
Pivot Point 1.2370
R11.2416
R2 1.2495
As for today’s figures, it seems that the market is quiet with some few minor data scheduled for release. Starting with Switzerland, the Employment Level announcement will be released; measuring the number of people employed during the previous quarter. Job creation is an important indicator of consumer spending.
Forecast: 4.220 M
Previous: 4.196 M
A higher than expected reading should be taken as positive for the CHF, while a lower than expected reading should be taken as negative for the CHF.
An important data to be released from Germany is the German IFO Business Climate Index; which rates the current German business climate and measures expectations for the next six months. It is a composite index based on a survey of manufacturers, builders, wholesalers and retailers and compiled by the IFO Institute for Economic Research.
Forecast: 103.0
Previous: 103.2
A higher than expected reading should be taken as positive for the EUR, while a lower than expected reading should be taken as negative for the EUR.
As for the U.S., the Service PMI is scheduled for release. It is monthly published by the market economics; it is based on surveys of over 400 executives in private sector service companies. The surveys cover transport and communication, financial intermediaries, business and personal services, computing and IT, hotels and restaurants.
An index level of 50 denotes no change since the previous month, while a level above 50 signals an improvement, and below 50 indicates deterioration.
Forecast: 57.3
Previous: 57.1
A reading that is stronger than forecast is generally positive for the USD, while a reading that is weaker than forecast is generally negative for the USD.
Staying with the U.S., the Dallas Fed announcement, which monthly conducts the Texas Manufacturing Outlook Survey to obtain a timely assessment of the state factory activity, will be released.
Firms are asked whether output, employment levels, orders, prices and other indicators increased, decreased or remained unchanged over the previous month.
Surveys details output are used to calculate the index; by subtracting the percentage of respondents reporting a decrease from the percentage reporting an increase.
When the share of firms reporting an increase exceeds the share of firms reporting a decrease, the index will be greater than zero; assuming that the indicator increased over the prior month. But if the opposite happens, the index will be below zero, assuming that the indicator has decreased over the prior month. An index will be zero when the number of firms reporting an increase is equal to the number of firms reporting a decrease.
Forecast: 8.0
Previous: 10.5
A higher than expected reading should be taken as positive for the USD, while a lower than expected reading should be taken as negative for the USD.
Moving to Japan, the Corporate Services Price Index (CSPI) is scheduled for release; measuring the change in the price of goods sold by corporations. It is a leading indicator of consumer price inflation.
Forecast: 3.6%
Previous: 3.5%
A higher than expected reading should be taken as positive for the JPY, while a lower than expected reading should be taken as negative for the JPY.
Finally from Japan, a highly important data to be released is the Monetary Policy Meeting Minutes. They are a detailed record of the Bank of Japan's policy setting meeting, containing in-depth insights into the economic conditions that influenced the decision on where to set interest rates.
We wish you luck in your trading activities. For any further assistance, please do not hesitate to contact us at analysis@ICMCapital.co.uk.
Disclaimer
The prices and news mentioned in this outlook are absolutely no guarantee of future market performance.
Financial markets can move in either direction causing profits to be made or complete losses to be incurred by the trader.
Each trader must decide for themselves what their risk appetite is and ensure that correct risk management procedures are in place before placing any trades.
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Your profit and loss will vary according to the extent of the fluctuations in the price of the underlying markets on which the trade is based.