- Market sentiment is slightly bearish (51%) for a second day in a row
- 100-pip pending orders improved further, bullish share rose to 54%
- Pair is bounded between resistance zone at 1.13 and support area at 1.1240/20
- Daily technical indicators are no longer bearish with respect to the Euro
- Economic events to watch in the next 24 hours: ECB Monetary Policy Meeting Accounts; US Unemployment Claims (Oct 2), FOMC Meeting Minutes
German industrial production unexpectedly declined in August, signalling that Europe's largest economy is feeling the effects of weaker demand from emerging markets. According to Destatis, production in the Euro area's powerhouse dropped by 1.2% in the reported period, following a revised 1.2% growth in July. Analysts expected a reading to gain 0.2% in August. On an annual basis, industrial output rose 2.3% in the given month, compared to a revised 0.8% increase in the prior month, while markets projected a 3.3% growth. The recent report also revealed that Germany is currently grappling with a slowdown in China and other emerging markets, as factory orders from countries outside the 19-nation Euro region fell more than 13% in July and August combined. Therefore, Germany's production focus is shifting to strengthening domestic spending.
Meanwhile, industrial sector in Spain expanded at a slower pace in August after a significant gain seen in the previous month. Industrial output in the Euro zone's fourth largest economy showed a 2.7% year-on-year rise during August, compared to the previous month's 5.2% reading. In the meantime, France's external trade deficit narrowed in August, as imports fell at a faster rate than exports. According to the French Customs, the deficit shrank to 2.975 billion euros in August from 5.283 billion euros in the same month last year.
Upcoming fundamentals: ECB to issue minutes of September meeting
There are just a few fundamental events expected on Thursday, and the majority of them are connected with some of the biggest central banks around the world. At 11:30 GMT we expect to get the European Central Bank's meeting accounts of the most recent monetary policy meeting, while analysts are looking for possible hints of expansion of the asset purchases programme. Meanwhile, the Fed meeting minutes are out at 18:00 GMT. Following a decision to keep interest rates on hold in September, economists want to see a level of divergence in opinions between different FOMC members on the matter.
EUR/USD in limbo around 1.1250
The outlook for the EUR/USD currency pair remains unclear for the time being as neither bulls nor bears are still able to overtake leadership of the market. Yesterday the cross remained capped by the 50% Fibonacci retracement of the Jan-Mar 2015 downtrend at 1.1280. On the other hand, demand is being created by monthly and weekly pivot points at 1.1241/20, as well as the 20-day SMA between them. While daily technical studies are giving mixed signals, we are also going to take a neutral approach with respect to EUR/USD's nearest future.Daily chart
Somewhat clearer bullish outlook can be projected in the one-hour chart. On Wednesday the only attempt of the Euro to violate the 200-hour SMA was immediately rejected. However, a confirmation of the 1.1280 is required to estimate next bullish steps of the pair.
Hourly chart
SWFX sentiment and pending orders swing around 50%
Meanwhile, bullish open positions at OANDA have somewhat rebounded from 39% to 44% during the previous trading session. SAXO Bank traders are also remaining largely pessimistic with respect to the common currency as their portion of the longs stays at just 33% today.
Spreads (avg,pip) / Trading volume / Volatility
Community members forecast the Euro to grow against the US Dollar this week
This week the number of bullish and bearish votes is almost equal, however, the bullish outlook obtained the majority (56%) of the votes. Meanwhile, the consensus forecast for this Friday, October 9 stands at 1.125.
At the same time, RacerX retains bearish views with respect to EUR/USD as he suggests that "the pair appear to be in a range between 1.10800 and 1.14600 for the month of September. This will likely continue until there is more news on the Fed's intentions with regards to the expected rate hike. I think that this uncertainty has held investors back preventing the range to be broken, either way. Nonetheless, I think that mid-term trend is still to the downside. Should it break 1.10800 support, I believe the pair might gain further momentum to the downside."