- SWFX market sentiment is 58% bearish
- 55% of pending orders in 100-pip range are set to SELL
- 58% of traders remain bullish on the Dollar
- Upcoming Events: Federal Funds Rate, FOMC Press Conference
In result of the previous trading session, the pair made an expected breakout from an ascending triangle and confirmed an existence of another pattern. The latter formation represents short-term rising wedge whose breakout point approximately matches with the Fed's decision announcement.
The US economic reports caused a temporary depreciation of USD/JPY during the Tuesday session. The Greenback lost against the Japanese Yen 10 base points or 0.09% to be seen trading near the 111.37 mark, though the decrease was not sustained as figures failed to impress the market. .
The Commerce Department revealed that the US building permits rose to the strongest level in seven months over the course of August with the total number of 1.30M permits issued. The property market was moving ahead before an expected transitory hit from Hurricanes Irma and Harvey. Though, the number of permits in damaged areas was not significantly weaker, housing could stay a drag on the US economy in the third quarter.
US interest rate hike in focus
Today is another big day for swing traders. From fundamental point of view, many experts believe that this time we will not see any interest rate hike from the Fed. A number of analysts suggest waiting until December. If there will be no action, then theoretically the buck should not make any significant moves. But, in practice, the interest rate announcements and subsequent press conferences always lead to short-term turbulence in the markets that can be observed a little bit before, during and a few hours after the fundamental event.
EUR/USD waits for Fed's decision
In line with expectations, a pressure from the 55- and 200-hour SMAs, better than expected German release as well as general informational background helped to pair to make a breakout from an ascending triangle pattern yesterday.
From technical point of view, the currency rate is continuing to feel pressure from the bottom from the before-mentioned moving averages. Hence, an area between 1.2030 and the weekly R1, which is located at the 1.2039 level, represents the next likely target to be reached by the pair. By the way, the moment of approaching to this resistance level practically coincides with the announcement of the Federal Funds Rate. In addition, that area also represents a breakout point from the recently formed rising wedge pattern.
Hourly Chart
From a daily perspective the pair faces a quite tricky situation. On the one hand, a large candlestick that the pair had last Wednesday can be considered, as a second reaction low of a dominant ascending channel. This fact suggests that the Euro has to continue its recovery against the Dollar.
On the other hand, the facts that the pair was stopped by the monthly PP at 1.1881 and failed to fully reach the bottom boundary of the pattern point out that at certain point it has to make a turn around and try to make a normal confirmation points. In this sense, a rebound from the monthly R1, which is located at the 1.2099 level, represents a very convenient barrier for that. Especially taking into account that two week ago it had already failed to break through it.
Daily Chart
Traders still bearish on the pair
The bearish market sentiment continues to dominate the market, as 58% of open positions are short. In the meantime, the outlook for the two currencies against the rest of the traded financial instruments is as follows. Euro is 62% bearish, while for the Dollar 58% bullish.
Traders of OANDA remain bearish, as 63% of open positions are short. Meanwhile, SAXO are also bearish on this currency pair with 62% of open short positions.
Spreads (avg, pip) / Trading volume / Volatility