Here are the key factors to keep in mind today for Euro trades:
- German Import Price Index: The German Import Price Index is expected to show a contraction of 1.1% in January monthly and 4.6% annualized. Forex traders can compare this with the contraction of 1.7% reported in December monthly and 3.7% annualized. Germany continues to import deflation into the Eurozone.
- German CPI: Economists expect deflation to continue in the largest economy in the Eurozone. The German CPI is expected to show an annualized contraction of 0.3% in February while the EU Harmonized CPI is expected to show a contraction of 0.5%. Forex traders can compare this with the 0.4% contraction and 0.5% contraction reported in January. A small bright spot may be the monthly increase in the CPI as well as EU Harmonized CPI which economists expect at 0.6% for both. The Euro could rally should the monthly data point towards inflation rather than deflation.
Here are the key factors to keep in mind today for US Dollar trades:
- Q4 GDP: Economists expect a downward revision for the fourth-quarter GDP from 2.6% annualized down to 2.0% annualized. This would be a big disappointment and forex traders may sell the US Dollar after the release of this report. Personal consumption is expected to remain unchanged at 4.3% and any downward revision there could add to the selling pressure. The GDP Product Price Index is expected to remain unchanged at 0.0% and so is the Core Personal Consumption Expenditure Index which was initially reported at 1.1%.
- US Pending Home Sales: Pending home sales are expected to increase by 2.0% in January monthly and 8.7% annualized. Forex traders can compare this with December’s contraction of 3.7% and increase of 8.5%. The US housing market has underperformed expectations and forex traders should be prepared for a lower figure than estimated.
Should price action for the EURUSD remain inside the 1.1200 to 1.1250 zone or breakout above it the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Short Position @ 1.1220
- Take Profit Zone: 1.2500 – 1.2800
- Stop Loss Level: 1.1000
Should price action for the EURUSD breakdown above 1.1200 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Long Position @ 1.1175
- Take Profit Zone: 1.1000 – 1.1100
- Stop Loss Level: 1.1250
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