EUR/USD Forms Bearish Outside Bar Prior to German PPI Release

Eurozone – German PPI

Today, at GMT 6:00 a.m., the Destatis will release the German Producer Price Index (PPI), which measure the changes in the price of sold goods by the German manufacturers in the prevous month.

Since manufacturers increase their prices when the cost of production goes up, binary options investors consider the German PPI to be a leading indicator of the overall German consumer inflation. Also, as Germany makes up a large portion of the overall Eurozone economy, its consumer inflation situation can have a substantial impact on the valuation of the Euro.

In August, the German PPI did not change and remained at 0.0%. However, this month, the forecast is set at a -0.3% decrease.

United States – Existing Home Sales

Later in the day, at GMT 2:00 p.m., the US National Association of Realtors will release  the existing home sales number, which is the annualized number of residential buildings that were sold during the last month in the country. However, this figure excludes the number newly building constructions.

Since the sale of an existing home usually has a wide-spread positive ripple effect in the local economy, collectively this figure acts as an excellent leading indicator of the overall economic health of the country. Therefore, binary options investors consider the existing home sales number to be an important data as it tends to have a considerable market impact.

Last month, the US existing home sales figure came out at 5.59 million and the forecast for this month is set at 5.50 million.

Trade Recommendation for the EUR/USD


Since the formation of a bullish outside bar (BUOB) on August 7. 2015, the EUR/USD was trending upwards. However, it started a retracement move on August 26, and the price closed below the important psychological support level around 1.1350

Last Friday, the EUR/USD formed another bearish outside bar (BEOB) and the low of the bar penetrated and closed below the 1.1350 level, once again.

As the German PPI is expected to decrease by -0.3% and the existing home sales in the US is expected to remain around 5.5 million, the fundamental outlook for the EUR/USD would be bearish at the beginning of the week.

Under the circumstances, it is recommended that traders consider placing a PUT order for the EUR/USD with their binary options brokers, once the price penetrates below the low of September 18, which is at 1.1268.

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About our Forex and Binary Options Analyst:  Asif Imtiaz

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