All Eyes On UK Referendum, Longs On EURUSD Encouraged
On Thursday, Markit released its monthly survey on eurozone’s economic health, with the weakest results in almost one-and-a half years. The Flash PMI for Composite Output was at 52.8 in June, in comparison with the previous reading of 53.1 in May.
Contributing to the slower growth in the euro area, France and Germany also witnessed declines in their respective readings for the month. Flash German Composite Output Index slid from 54.5 in the preceding month to a reading of 54.1, while French reading fell 15 points to a four-month low of 49.4.
Markit’s Chief Economist today commented that this data indicated a slightly slower pace of expansion due to uncertainties in the global situation that burdened business confidence. For the second quarter in 2016, eurozone’s economy is not likely to match the growth rate of 0.6% at the start of the year.
Meanwhile, the US economy still remains subdued with no clear signals of a strong recovery. Data released yesterday indicated that the real-estate sector grew at a sluggish pace for the last two months as the House Price Index inched up by just 0.2% in April from the month before, well below the expectation of 0.6%. Existing Home Re-sales, met the forecast of 5.53 million buildings sold during May. But the pace of increase has been slowing down over the last 3 months.
On the second day of her semi-annual congressional testimony, The FED President gave no clues on the timing of another rate hike. However, she expressed an optimistic belief that there would be a pickup in growth and the central bank would keep a close watch on the situation in order to consider a suitable course of action.
Currently, Birtain’s EU Referendum is the market’s main focus. The result of the referendum can certainly cause some volatility in global markets.
Later Today, the Department of Labor will publish unemployment claims for the week ending on June 17th .Claims are expected to come in at 271,000 people filing for jobless benefits last week. The greenback remains weak in today’s trading session with the dollar index hitting a six-week low of 93.17.
Fig. EURUSD D1 Technical Chart
RSI (14) is heading upwards from the average, which indicates that the market is building up some energy to move higher from the 38.2% level of Fibonacci retracement. A green trend signal has appeared under the price chart since ten days ago, signaling a long position on the pair. The euro is expected to benefit from the parabolics band below to surge high against the US dollar.
Buy stop at 1.14065, Stop loss at 1.13079, Take profit at 1.15075