- SWFX market sentiment is 62% bearish
- Trader pending orders 57% bearish
- Pair opened Friday's session at 1.1218
- Upcoming Events: UK Prime Minister May's Speech
The stagnation has ended. The EUR/USD currency exchange rate is following in the previously established patterns. Namely, the currency exchange rate is set to decline for the few upcoming trading sessions. That will occur until it reaches the notable lower trend line of a medium term ascending pattern.
As markets expected, the European Central Bank left its interest rates and monetary policy unchanged at its Thursday meeting; however, it signalled that further rate cuts were highly unlikely. Policymakers acknowledged that the 19- country currency bloc was performing strong economically but inflation remained growth remained subdued, forcing the Bank to keep rates and policy on hold. However, policymakers gave a balanced view on the Euro zone economy. Still, the ECB did not even consider an option of lowering its 2.3T euro asset purchases.
UK turmoil affects the world
It has been almost a year since the United Kingdom fundamental events managed to affect the whole financial world. Namely, that was the Brexit vote. The turmoil went into another chapter with the elections of the parliament of the country, which once more shook the financial world. Due to that reason the most important scheduled event for this Friday is the speech of Theresa May, which is set to occur at some time during the day. However, some sources have stated that it might get cancelled.
EUR/USD falls below 1.12 mark
The European Central Bank did not change its policy on Thursday. However, the release of the suspense was enough to cause the reveal of the future direction of the EUR/USD currency exchange rate. The pair began to move lower, as it passed the support of the weekly PP at 1.1227 until it reached the support of the 38.20% Fibonacci retracement level at the 1.1188 mark. By having a glance at the movements of the pair during the past few trading sessions it can be assumed that the rebound from the retracement level is a marking of the first point in a short term pattern. The pattern is most likely going to guide the pair lower to the medium term ascending channel's lower trend line, which on Friday was close to the 1.1140 level.
Hourly Chart
The daily chart reveals that the pair is clearly piercing one support level after another. However, the 20-day SMA has joined the support of the Fibonacci retracement level near the 1.1190 mark. Although, it is most likely not going to provide additional support soon, as it has been passed more than once. In the near future it should be looked at as a resistance level rather than a support.
Daily Chart
Read More: Technical AnalysisPending commands become bearish
SWFX traders are 62% short in regards to the pair on Friday. Meanwhile, 57% of set up orders are to sell the Euro, compared to 52% of buy orders previously.
OANDA trader sentiment remains largely bearish, as 69.86% of open positions are short. However, SAXO bank clients have decreased their short positions amount, as 61.47% of open positions are short, compared to 66.04% on Thursday.
Spreads (avg, pip) / Trading volume / Volatility
Average forecast says EUR/USD will trade around 1.11 in September
Traders, who were questioned on their longer-term views on EUR/USD between May 9 and June 9 expect, on average, that the currency pair may trade slightly below 1.11 during the first week of September. In general, 42% of participants believe the exchange rate will be above 1.12 in the following ninety days. Meanwhile, 45% of respondents expect to see the rate below 1.10.