Good morning traders, though there is lovely weather out it hasn't been a good day for the US dollar. The dollar collapsed against the basket of global currencies, urged by a surge in the single currency Euro. The market felt the heat, particularly, after the European Central Bank proposed a tapering stimulus. Tapering refers to cutting down bond buying programs in order to decrease the money supply in the market. The ECB sounded Hawkish on Tuesday and managed to attract investors.

Daily Highlights

Today is expected to be a big day as we await four speeches from major policy makers of the big economies. Investors are recommended to wait for the outcome of the speeches before placing any fresh trades.

European Central Bank Forum

Today, the officials of major central banks are due to participate in a panel discussion at the European Central Bank Forum on Central Banking, in Portugal at 13:30 (GMT). The participants are BOC Gov Poloz, ECB President Draghi, BOE Gov Carney and BOJ Gov Kuroda. I'm not sure what the outcome will be, but since this will be a discussion, we need to remain observant.

US Pending Home Sales m/m is expected to be released at 14:00 (GMT) with a positive forecast of 0.9% (-1.3% previously). Pending Home Sales helps us understand consumer confidence in their jobs, business and ultimately the economy. The increased figure reflects more demand and increased demand is a signal of economic growth. The US dollar surges over increased demand.

US Crude Oil Inventories are due to be released at 14:30 (GMT) with an expectation of a -2.1M draw. Last week's draw was -2.5M barrels.

EUR/USD – The Chief Market Mover

The Euro gained heavily against the US dollar hitting $1.1338, after gaining 1.4%  and placing a high of around $1.1349. Surprisingly, the EUR/USD breached the significant resistance level of $1.1285 after Draghi's rhetoric, the President of ECB. He suggested that an imminent shift in monetary policy will render net support for the single currency Euro.

On Tuesday, the ECB President Draghi remained confident regarding the growth trends, arguing that all the signs are pointing to a recovery in the Eurozone. President Draghi underpinned the Euro by saying the growth was above the trend and well disseminated over the Euro area. 

In addition to this, the US durable goods order figure was lower than anticipated, with a drop of 1.1% for the month of May. We have also noticed a dip in the Chicago Fed National Activity Index for May, proving a loss of momentum in the US economy.  For a better understanding of EUR/USD, refer to the article here.

Forex Trading Signal – Idea

At the moment, the EUR/USD is in between an upper and lower range. Thereby, investors are recommended to wait for a retracement until $1.1285 before buying in the pair.

EUR/USD – 4 Hours Chart – Symmetric Triangle Breakout

Technical Outlook -Intraday

• Firstly, we can see a big bullish candle on the daily chart which has formed a Bullish Engulfing pattern, demonstrating that the majority of investors are trading with a bullish bias. Usually, the bullish engulfing initiates a fresh buying trend in the market.

• Secondly, the RSI at 84 and Stochastic at 94 are recommending that the market has entered the overbought region and investors may take profit ahead of placing fresh buyings.

• Thirdly, the 50- periods EMA is signaling a bullish shift in the pair. Now the EUR/USD is trading with a buying trend.

• Lastly, the pair has an immediate support at $1.1285, while the resistance prevails at $1.1360 & $1.1410.

Support     Resistance

1.1227         1.1398

1.1117          1.1459

1.1056         1.1569

Ending Remarks

Today, the market will be waiting for the speeches from the officials of four major central banks which are expected at 13:30 (GMT). The outcome is highly unpredictable, thereby, the best bet is to wait for the releases before entering the market.  Stay tuned for more Forex trading signals and updates. Good Luck!