- SWFX market sentiment is 48% bearish
- Trader pending orders are 58% to sell
- Pair opened Friday's session at 1.0662
- Upcoming Events: Trump's Speech
As markets expected, the European Central Bank left its monetary policy unchanged at its January meeting on Thursday. Following the policy meeting, the ECB President Mario Draghi said the Euro zone's economic recovery remained subdued. Moreover, the ECB President stated at the post-meeting press conference that the region's economic growth is unlikely to gain momentum in the upcoming months due to the slow pace of structural reforms. According to Draghi, fiscal policies should also support the Euro zone's economic recovery within the European Commission's system of rules. The headline inflation rate is expected to rise more in the short-term, driven by higher energy prices. In the meantime, the Central bank said that underlying inflationary pressures in the region remained benign. However, the ECB expressed hopes for an increase in core inflation over the medium term. The EUR/USD pair hit its daily low of $1.0607, following Draghi's comments on inflation. The Central bank pointed to an uptick in manufacturing activity and rising confidence indicators. Nevertheless, it signaled it was ready to provide additional monetary stimulus if economic conditions worsen.
Back in December, the Bank cut its monthly asset purchases to 60 billion euros but extended the QE program by six months until at least March 2017.
Upcoming fundamental releases: Trump's speech
The single fundamental event on the economic calendar could come with some volatility in the currency markets as the world will be watching President-Elect Donald Trump's speech and seeking some indications on foreign and domestic policy.
EUR/USD still inside junior channel
Daily Chart: EUR/USD opened green on Friday after the pair was denied access to levels below the 55-day SMA of 1.0608 two days before. The motion still should remain on the bearish side due to the ultimate target lying at the channel bottom boundary, even if today closes green, meaning that risk still lies both above and below and the daily theme could reverse. In case the pair attacks the supply area above at 1.0733, there is decent risk that the junior channel will break, due to the recent stickiness of its upper part.Daily chart
Hourly chart: The hourly chart however, still leans towards the bearish themes and has now sketched a rising wedge formation which could lead to a downtrend. The pair has abandoned the upper boundary of the trend-line and will be testing a cluster of SMA below next. The area of significance lies at 1.0664/61 with some more risk at 1.0653 and another SMA beneath at 1.0625. Targets on the upside are not as prominent, meaning that just 1.0716 would steal some momentum when 1.0733 is attacked.
Hourly chart
SWFX traders shift to bearish side
SWFX traders have become bearish regarding the pair, as 48% of open positions are short on Friday. In addition, 58% of trader set up orders are to sell the Euro.
OANDA traders have become bearish, regarding the pair, as 48.67% of open EUR/USD positions were short on Friday. Meanwhile, SAXO bank traders increased their bearish outlook, as 60.08% of open positions were short, compared to 57.78% previously.