- SWFX market sentiment is 55% bearish
- 67% of pending orders in 100-pip range are set to SELL
- 50% of traders are bearish on the Dollar
- Upcoming Events: Central Bank Communications Conference, US PPI
The common European currency is continuing to surge against the Dollar in junior ascending channel. An increasing bearish sentiment as well as approaching towards the upper trend-line of the dominant descending channel indicates on an upcoming turnaround.
The EUR/USD exchange rate sustained an upward trend after the monthly report of the US budget balance was published. The Euro was little changed against the Greenback at the 1.1665 mark to remain under bullish sentiment, targeting the 1.1680 area on Tuesday morning.
The Treasury Department stated that the US Federal Government had a deficit of $63B over the course of October, where higher spending was attributed to disaster relief after a hurricane season. Steven Mnuchin, the US Treasury Secretary, projected that the tax-cut plan is likely to accelerate the US economic growth, which would raise revenue and narrow a fiscal gap. However, higher-than-anticipated deficit highlighted concerns that excess of spending over receipts could increase further.
Central Bank Communications Conference in Frankfurt
The key event of the day will be the Central Bank Communications Conference hosted by the European Central Bank in Frankfurt. To be more precise, the panel discussion with President Draghi as well as Governors Kuroda, Carney and Yellen participation. In second half of the day traders might also take a look at release of the US PPI data (however, it is not expected to cause high volatility in the market).
EUR/USD trades at 1.1675
In line with expectations, the common European currency continues to advance against the Dollar in one-week long ascending channel. However, there is a need to notice that yesterday fluctuations of the rate started to narrow down, which indicates on transformation of the current pattern into the rising wedge formation. Most likely a breakout will happen as soon as the currency rate will hit the 23.6% Fibonacci retracement level located at 1.1679. On the other hand, the rising 55-hour SMA might constrain the exchange rate from rapid falling. However, the above scenario might be altered due to the ECB President Draghi and the Fed Chair Yellen discussion at the Central Bank Communications Conference.
Hourly Chart
On hourly chart the currency pair is approaching towards the upper resistance line of a dominant descending channel. As that boundary is additionally protected by the 100-day SMA, the exchange rate most probably is going to make a rebound. A release of the American PPI data has a perfect chance to support such turnaround.
Daily Chart
Traders stay neutrally bearish
In result of the previous trading session the bearish market sentiment slightly increased, as 55% of open positions are short now.
In the meantime, the outlook for the two currencies against the rest of the traded financial instruments is the following: the Euro is 62% bearish and the Dollar is 50% bullish.
Traders of OANDA remain bearish, as 63% (+0%) of open positions are short. Meanwhile, SAXO are neutrally bearish on this currency pair with 58% (+2%) of open short positions.
Spreads (avg, pip) / Trading volume / Volatility