- SWFX market sentiment is 52% bullish
- Trader pending orders are 62% to sell
- Pair opened Monday's session at 1.0718
- Economic events to watch over the next 24 hours: US JOLTS Job Openings, US Crude Oil Inventories
The number of homes that went under contract inched higher in October, a sign the housing market could be plateauing in the final months of the year. The National Association of Realtors reported that its pending home sales index, which tracks contract signings for previously owned homes, edged up 0.1% from a downwardly revised September reading to a seasonally adjusted 110.0. Sales typically close within a month or two of signing. It is essential to note that while demand for housing is high, supply still continues to weaken across much of the nation and is well below 2015 levels. While homebuilders ramped up production in October, overall construction is still well below historical norms. Builders cite the high costs of land, labor and regulation as barriers to increased volume.
Corporate lending in the Euro zone advanced at the fastest pace since June 2011 in October, while the total amount of currency in circulation fell, official figures showed on Monday. According to the European Central Bank, lending to firms rose 2.1% on a monthly basis in October, the fastest pace in more than five years, following the preceding month's gain of 2.0%. Lending to households climbed 1.8% on an annual basis in the same month, unchanged from the September reading, whereas market analysts anticipated a slight increase to 1.9%. A measure of the money supply in the region, known as M3, grew 4.4% year-over-year in October, down from the prior month's 5.1% and below the 5.0% increase market forecast. The Central bank's policymakers are widely expected to extend their quantitative easing program by six months at their next meeting on December 8. According to the OECD's latest forecasts published on Monday, the Euro zone is set to grow 1.7% in 2016 and 1.6% in 2016, both figures were revised up from the September estimates despite the post-Brexit uncertainties. Moreover, later on the same day, Mario Draghi said in his speech to the European Parliament that the economy managed to overcome major challenges caused by Britain's decision to leave the European Union.
Upcoming fundamentals: US JOLTS Job Openings, US Crude Oil Inventories
US Crude oil inventories will be the main market mover for EUR/USD and could lead to some broken technical levels at 15:30 GMT. JOLTS job openings could set the ground at 15:00 GMT and is likely to send some shock waves if targets are missed.
EUR/USD in tight trading range
Daily Chart: The Euro opened green against the US Dollar Wednesday morning, after re-entering the channel on the hourly chart, but failing to dive underneath the January low of 1.0709. The pair has had a completely non-volatile session due to a lack of market movers, but could show a small green candle that would bounce from the bottom trend-line of the channel at 1.0734. On the other hand, a break below the newly set floor would mean a slip towards the bottom trend-lie of the channel, as it is the only level of significance on its way. Considering the tight range the pair is currently trading in (1.0709-1.0718) it is hard to tell yet what the day will bring.Daily chart
Hourly chart: The hourly chart shows that EUR/USD has returned inside of the channel it exited on Monday, but is still sticking to the upper boundary of the pattern. The pair is now floating around the weekly R1 at 1.0718 with little amplitude, and is now approaching the tough 1.0709 area where the 55-hour SMA, January low and Bottom Bollinger Band cluster. We will look for some difficulties to slip below this level, but if it does happen, 1.0678 will be the next target. A surge is feasible as well, and would at first lead to tests of 1.0730, the upper trend-line of the channel.
Hourly chart
Sentiment remains bullish, contrasts pending orders
SWFX traders maintained constant optimism, as 52% of open positions are still long, same as Tuesday. Meanwhile, pending orders are bearish, as 62% of commands are to sell the Euro.
OANDA traders have roughly maintained their slightly optimistic stance, as 55.83% of open EUR/USD positions were long on Wednesday morning, compared to 55.53% on Tuesday. In addition, SAXO Bank clients have decreased their bearishness with 46.06% of all positions being bought, compared to 43.66% on the previous trading session.