EUR/USD ignores data, remains unchanged

Note: This section contains information in English only.
Source: Dukascopy Bank SA
  • SWFX market sentiment is neutral on Tuesday
  • Bulls may suffer from future losses as they are keeping only 35% of 100-pip pending orders
  • German and US GDP data to drive currency markets in the next 24 hours
  • Daily technical indicators continue to be undecided
  • Economic events to watch in the next 24 hours: German GDP (Q3) and IFO Business Climate (Nov); US Prelim GDP (Q3), Goods Trade Balance (Oct) and CB Consumer Confidence (Nov)

© Dukascopy Bank SA
Concerns over global demand and rising US Dollar were negatively reflected in the pricing of commodity-linked currencies on Tuesday. EUR/AUD and EUR/NZD were the largest nominal gainers as they both added around 0.6%. EUR/GBP followed with a gain of 0.3%, helped by expectations that the UK Government will be forced to partly abandon its deficit reduction plan after announcements of more defence spending. From the side of daily losers, any decline failed to exceed 0.13%. The Euro was broadly supported by PMI data releases for the Euro zone, which outpaced estimates in both manufacturing and services industries. Meanwhile, EUR/USD decided not to end the trading session in green, following unexpected news from the Fed. The regulator's Chair Janet Yellen defended the low interest rate policy of the past seven years, which helped to create millions of jobs, support consumer spending and give boost to economic growth in the US. On top of that, she noted that markets can expect the pace of monetary policy normalisation to be gradual. Meanwhile, Goldman Sachs analysts highlight that the Fed can raise the target range for the Fed Funds rate by 100 basis points throughout next year, which means "one hike per quarter".

Business activity in the Euro zone rose at the fastest pace since mid-2011 in November and far faster than predicted, as a weak Euro and price cutting helped to increase the number of new orders. According to the market research group Markit, the flash composite PMI, which measures the combined output of the both manufacturing and service sectors, climbed to 54.4 this month from 53.9 in October, reaching the highest level in more than four years and overshooting economists' forecasts for 53.9. The preliminary Euro zone manufacturing PMI increased to a seasonally adjusted 52.8 this month, hitting a 14-month high and up from 52.3 in October. At the same, the flash services PMI improved to 54.6 in November, up from 54.1 a month earlier. The recovery continued to be driven by the service sector, where business activity and new business surged at the fastest pace since May 2011 and employment showed the biggest monthly gain for five years.

Germany's economic output increased this month and companies reported that new business rose at the fastest pace in two years. The services index reached its strongest reading since September 2014 and a gauge of manufacturing also advanced. As a result, German composite index rose to 54.9, the highest since August.

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Upcoming fundamentals: Germany's consumer confidence to improve in November



Following no-surprise gross domestic product statistics from Europe's largest economy, markets will be waiting for the IFO Institute to release its Business Climate Index. It is estimated to pick up by one tenth of one point to reach 108.3 points in November. The survey is based on answers from 7,000 biggest German companies. Nevertheless, the most important bunch of daily statistics will be published in the US, where GDP data for Q3 is due at 13:30 GMT. Analysts are waiting for an upward revision from 1.5% to 2.0%. For the past five quarters all revisions used to positively exceed average projections of the market.


EUR/USD ignores data, remains unchanged

EUR/USD attempted to develop beyond 1.06 on Monday, but the Euro's bulls managed to stabilize the situation and sent the currency pair back to 1.0650. Nonetheless, bearish expectations are still on the table and the key target level is April low at 1.0519. Trading volume is relatively high, meaning volatility is not prepared to diminish. As for the technical indicators on a daily time-frame, the majority of them are mixed with respect to EUR/USD. Among them, RSI assumes the pair is neither oversold nor overbought, despite a strong decline that has taken place recently.

Daily chart
© Dukascopy Bank SA

In the one-hour chart, we may observe some recovery in the next 24 hours, being that EUR/USD has almost approached a bearish pattern's lower trend-line. A rally should be contained by the 1.07 mark, which is reinforced by 200-hour SMA at 1.0693.

Hourly chart
© Dukascopy Bank SA

SWFX bulls lose their advantage over bears

Market sentiment became completely undecided in the past 24 hours. Currently the same number of open trades is held by bulls and bears. Therefore, it is worth looking at pending orders in both 50 and 100-pip ranges, in order to predict the future sentiment among SWFX market participants. The commands continue signalling that the Euro is going to depreciate against the US Dollar. Separately, only 35% (32% yesterday) of them are set to acquire the 19-nation currency in 100-pip range from the spot price at the moment of writing.

Expectations among OANDA and SAXO Bank traders are mixed in the morning on Tuesday. OANDA clients believe the common currency has some growth potential as bulls are holding 52.18% of all open positions. In the meantime, 55% of SAXO Bank clients are short with respect to EUR/USD.












Spreads (avg,pip) / Trading volume / Volatility



Average forecast says EUR/USD will trade at 1.08 by February 2016

Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between Oct 24 and Nov 24 expect, on average, to see the currency pair around 1.08 by the end of next year's February. Majority of participants, namely 55% of them, believe the exchange rate will be generally below this mark in ninety days, with 32% alone seeing it below 1.04. Alongside, only 23% of those surveyed reckon the price will trade in the range between 1.08 and 1.14 by the end of February 2016.

© Dukascopy Bank SA

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