- Share of long pending orders in 100-pip range grew from 49% to 54%
- Market sentiment is slightly bearish (53%) at the moment
- After crossing 1.1295, bulls to aim at Jun high (1.1437)
- Demand zone below 1.13 to support the pair this week
- Economic events to watch in the next 24 hours: French CPI (Aug); German ZEW Economic Sentiment (Sep); Euro zone Trade Balance (Jul), Employment Change (Q2) and ZEW Economic Sentiment (Sep); US Retail Sales (Aug), Empire State Manufacturing Index (Sep) and Industrial Production (Aug)
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Industrial output in the Euro area increased at its fastest pace since February, rising 0.6% in July, well ahead of market expectations of a 0.3% increase, suggesting that a positive contribution to growth is likely in the third quarter. Year-on-year, the production measure grew 1.9% in July, after a 1.5% increase in the previous month, revised from the 1.2% growth reported initially. Economists were looking for a 0.6% rise, while the actual annual gain was the strongest since March.
Concerning the good categories, the monthly pickup in production was led by a 3% surge in energy output, which was a similar rate of growth as seen in the previous month. Capital goods production rebounded with a 1.4% rise and durable goods output advanced 1.3%. However, production of both intermediate goods and non-durable consumer goods dropped 0.6% each from the preceding month.
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Upcoming fundamentals: German economic confidence to decline in September
ZEW economic survey for Germany is going to be published at 9:00 GMT today. The sentiment indicator is based on opinions of institutional investors and economists about the state of German economy. Even though a reading above zero is assumed to point on optimism, the September's index is likely to decline from 25 points to 18.3 points on a monthly basis. Meanwhile, other pan-Euro zone data will be released at the same time with German ZEW survey. Among them, markets expect the Euro area's employment to show a 0.1% increase in the second quarter of this year, while July trade surplus has probably remained broadly unchanged at 21.4 billion euros.
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EUR/USD refuses to return below 1.13
Bears attempted to commence a sell-off of the Euro against the Dollar on Monday, by pushing the cross below 1.13. However, they failed eventually as the pair managed to close the trading session above this round level. We see EUR/USD preserving its upside corrective sentiment in the short-term. Additional support is offered by the demand zone at 1.1295/45. On the other hand, any changes may remain quite subdued before the Fed interest rate decision on Thursday.Daily chart
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Another upward-sloping channel is being formed in the one-hour chart for the EUR/USD currency pair. This pattern has a precipitous positive slope, which also increases the risk of both boundaries being violated in the foreseeable future. However, as long as the pair keeps hovering above 200-hour SMA and 23.6% Fibonacci retracement our outlook remains moderately bullish.
Hourly chart
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SWFX sentiment is bearish towards EUR/USD
Meanwhile, the total number of bullish positions at OANDA amounts to 40.66% at the moment, while SAXO Bank market participants are even more pessimistic with respect to the common currency as their portion of the longs takes up only 34% of all open trades on Tuesday.
Spreads (avg,pip) / Trading volume / Volatility
Average forecast says EUR/USD will trade at 1.13 by December
Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between Aug 15 and Sep 15 expect, on average, to see the currency pair around 1.13 by the end of December. The majority of participants, namely 58% of them, believe the exchange rate will be generally below 1.14 in ninety days, with 39% alone seeing it below 1.10. Alongside, 25% of those surveyed reckon the price will trade in the range between 1.14 and 1.20 by the end of December of this year. © Dukascopy Bank SA