- 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)
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.
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
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
SWFX bulls lose their advantage over bears
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.