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EUR/USD Forecast 23 May 2014

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EUR/USD Chart 23 May 2014
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The Euro is set to take higher from current levels in our opinion

As the price levels below 1.3650 have been now tested multiple time, our expert analysis on the situation calls that there is no further scope for the single currency to fall at the current time. Only a serious blow to fundamentals from Friday's important German data could change the outlook.

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According to our analysis and following Thursday's dismal PMI's from France and the Euro Zone we still didn't see a sustained break below 1.3650 in the EUR/USD binary options forex pair. So what can we do at the current juncture? Well only one thing remains - buying daily calls becomes our preferred strategy.

Current levels around 1.3650 seem decent enough to make this a reality, however in case we see a fallout in Friday's German IFO data which will be released at 08:00 GMT with expectations centered at 106.6 points, there could be a spike lower that could provide an even better opportunity to buy.

The market has gotten a bit ahead of itself, as the European Central Bank is elected to reduce its key interest rates to 0.25% next month. That will most certainly happen, however it doesn't warrant that further steps will be taken by European policymakers to address the lowering inflation pressures.

In our view today's PMI data, particularly from France was very very disappointing, however that wasn't enough to drive the Euro lower. Any good trader knows the rule, if an asset is not falling on bad news, and trust us, today's news were really bad with France expected to contract for the month of May, one just has to buy the asset.

If we look at the chart the first viable level to buy calls is the current one, then if we reach 1.3635, which was the lowest level we have seen in three months, then that could provide another buying opportunity. That said, if we see a sustained hourly break of that level there is no reason to stay on the call side.

If 1.3630 gives way on an hourly basis closing, we would be switching our strategy to buying daily puts in the coming sessions. The next strong level on the upside which should be closely tracked is around 1.3730. If that gives way, we should be seeing a spike higher to mark 1.3780.

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