The EURUSD started to rally after the ECB announced its stimulus package. While opinions on the success of such measures differ, for now forex traders have decided to trust the monetary policy and pushed this currency pair off of its lows. Inflationary pressures remains absent as evident in the latest data released this morning out of Germany and Spain. Have central banks ran out of ammunition and ideas? Studies have indicated that QE doesn’t have a positive impact on the economy and lead to a reduction in lending. Will the EURUSD rally extend? Today’s fundamental analysis will take a look at the upside potential in this currency pair and weigh the downside risk.
Forex traders will get key US data before heading into the weekend which is expected to impact the US Dollar. With the US Fed’s expectation to deliver another interest rate cut next week, the Import and Export Price Index will play a greater role. Most attention will be paid to retail sales data which is expected to show an increase, but at a far smaller rate than in July. Consumer confidence will also be released as the last big economic data point for the trading week. How do consumers in the US feel and how will this impact spending moving forward? Is it time to buy the EURUSD? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month in profits!
Here are the key factors to keep in mind today for Euro trades:
- German Wholesale Price Index: The German Wholesale Price Index for August decreased by 0.8% monthly and by 1.1% annualized. Forex traders can compare this to the German Wholesale Price Index for July which decreased by 0.3% monthly and by 0.1% annualized.
- Final Spanish CPI: The Final Spanish CPI for August decreased by 0.1% monthly and increased by 0.3% annualized. Economists predicted a decrease of 0.1% and an increase of 0.3%. Forex traders can compare this to the Spanish CPI for July which decreased by 0.6% monthly and which increased by 0.5% annualized. The Final Spanish Harmonized Spanish CPI for August decreased by 0.1% monthly and increased by 0.4% annualized. Economists predicted a decrease of 0.1% and an increase of 0.4%. Forex traders can compare this to the Spanish Harmonized Spanish CPI for July which decreased by 1.1% monthly and which increased by 0.6% annualized.
- Eurozone Trade Balance: The Eurozone Trade Balance for July is predicted at €17.5B. Forex traders can compare this to the Eurozone Trade Balance for June which was reported at €17.9B.
Here are the key factors to keep in mind today for US Dollar trades:
- US Import and Export Price Index: The US Import Price Index for August is predicted to decrease by 0.5% monthly and by 2.0% annualized. Forex traders can compare this to the US Import Price Index for July which increased by 0.2% monthly and which decreased by 1.8% annualized. The US Import Price Index excluding Petroleum for August is predicted to decrease by 0.1% monthly. Forex traders can compare this to the US Import Price Index excluding Petroleum for July which was reported flat at 0.0% monthly. The US Export Price Index for August is predicted to decrease by 0.5% monthly and by 1.4% annualized. Forex traders can compare this to the US Export Price Index for July which increased by 0.2% monthly and which decreased by 0.9% annualized.
- US Advanced Retail Sales: US Advanced Retail Sales for August are predicted to increase by 0.2% monthly and Retail Sales Less Autos are predicted to increase by 0.1% monthly. Forex traders can compare this to US Advanced Retail Sales for July which increased by 0.7% monthly and to Retail Sales Less Autos which increased by 1.0% monthly. Retail Sales Less Autos and Gas for August are predicted to increase by 0.3% monthly and Retail Sales Control Group are predicted to increase by 0.3% monthly. Forex traders can compare this to Retail Sales Less Autos and Gas for July which increased by 0.9% monthly and to Retail Sales Control Group which increased by 1.0% monthly.
- US Michigan Consumer Sentiment: Preliminary US Michigan Consumer Sentiment for September is predicted at 90.9. Forex traders can compare this to US Michigan Consumer Confidence for August which was reported at 89.8. Preliminary Current Conditions for September are expected at 107.0 and Preliminary Expectations are predicted at 82.0. Forex traders can compare this to Current Conditions for August which were reported at 105.3 and to Expectations which were reported at 79.9.
- US Business Inventories: US Business Inventories for July are predicted to increase by 0.3% monthly. Forex traders can compare this to US Business Inventories for June which were reported flat at 0.0% monthly.
Should price action for the EURUSD remain inside the or breakout above the 1.1065 to 1.1140 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 1.1090
- Take Profit Zone: 1.1245 – 1.1320
- Stop Loss Level: 1.1015
Should price action for the EURUSD breakdown below 1.1065 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 1.1015
- Take Profit Zone: 1.0840 – 1.0925
- Stop Loss Level: 1.1065
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