After the US Fed appears to prepare the market for an interest rate cut, all eyes will be on the ECB today. While no change is expected in their current three main interest rates, forex traders have increased their expectations for more stimulus. Calls have increased as PMI data has decrease steeper and faster than anticipated and press conference which will follow 45 minutes after the interest rate announcement will be closely follow. Mario Draghi has been under pressure and hinted that the central bank will support the economy. Will he announce more QE and how will this impact the Euro? The EURUSD just completed a breakout above its horizontal support area, will today’s data encourage more upside? A review of stock broker predictions in regards to QE indicates that consensus is that the ECB will announce more over the summer months.
Here are the key factors to keep in mind today for Euro trades:
- German Factory Orders: German Factory Orders for April are predicted flat at 0.0% monthly and to decrease by 5.9% annualized. Forex traders can compare this to German Factory Orders for March which increased by 0.6% monthly and which decreased by 6.0% annualized.
- German Markit Construction PMI: The German Markit Construction PMI for May is predicted at 52.1. Forex traders can compare this to the German Markit Construction PMI for April which was reported at 53.0.
- Eurozone GDP: Eurozone Final GDP for the first-quarter is predicted to increase by 0.4% quarterly and by 1.2% annualized. Forex traders can compare this to the previous Eurozone GDP for the first-quarter which increased by 0.4% quarterly and by 1.2% annualized. Eurozone Household Consumption for the first-quarter is predicted to increase by 0.6% quarterly, Eurozone Government Expenditure is predicted flat at 0.0% quarterly and Eurozone Gross Fixed Capital is predicted to increase by 0.5% quarterly. Forex traders can compare this to Eurozone Household Consumption for the fourth-quarter which increased by 0.2% quarterly, to Eurozone Government Expenditure which increased by 0.7% quarterly and to Eurozone Gross Fixed Capital which increased by 0.6% quarterly.
- Eurozone Employment: Final Eurozone Employment for the first-quarter increased by 0.3% quarterly and by 1.3% annualized. Forex traders can compare this to previous Eurozone Employment for the first-quarter which increased by 0.3% quarterly and by 1.3% annualized.
- ECB Rate Decision: The ECB is predicted to keep its Interest Rate at 0.00%, its Deposit Facility Rate at -0.40% and its Marginal Lending Facility Rate at 0.25%; this would equal no change in the ECB rate policy from the previous meeting.
After US Fed Chairman Powell ignited the second biggest US equity rally of 2019 with his dovish tone and as more FOMC members suggest that an interest rate cut will be warranted, how will the US Dollar be traded? Economic data today will focus on the labor market, but today’s data won’t be part of tomorrow NFP report for May. How to trade forex in this environment with a profitable outcome can be rather simple, just follow the recommendations posted by our expert analysts at PaxForex Daily Fundamental Analysis!
Here are the key factors to keep in mind today for US Dollar trades:
- US Non-Farm Productivity and Unit Labor Costs: Final US Non-Farm Productivity for the first-quarter is predicted to increase by 3.5% quarterly and Unit Labor Costs are predicted to decrease by 0.9% quarterly. Forex traders can compare this to previous US Non-Farm Productivity for the first-quarter which increased by 3.6% quarterly and to Unit Labor Costs which decreased by 0.9% quarterly.
- US Initial Jobless Claims and Continuing Claims: US Initial Jobless Claims for the week of June 1st are predicted at 215K and US Continuing Claims for the week of May 25thh are predicted at 1,662K. Forex traders can compare this to US Initial Jobless Claims for the week of May 25th which were reported at 215K and to US Continuing Claims for the week of May 18th which were reported at 1,657K.
- US Trade Balance: The US Trade Balance for April is predicted at -$50.6B. Forex traders can compare this to the US Trade Balance for March which was reported at -$50.0B.
Should price action for the EURUSD remain inside the or breakout above the 1.1215 to 1.1240 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 1.1230
- Take Profit Zone: 1.1390 – 1.1445
- Stop Loss Level: 1.1180
Should price action for the EURUSD breakdown below 1.1215 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 1.1190
- Take Profit Zone: 1.1020 – 1.1100
- Stop Loss Level: 1.1215
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