- SWFX market sentiment is 54% short
- Pending orders in the 100-pip range are set to sell in 60% of cases
- The market is still taking in the US Fundamentals
By the time of creation of this analysis the EUR/USD had jumped on Thursday morning and reached above resistance levels at the 1.1480 mark. The reason for the surge were the new news that the US Federal Reserve will not hike their interest rates next year three times. Instead the Fed intends to hike two times. It clearly is new information that decreases the future expectations of the cost of the USD.
The European Single Currency depreciated against the US Dollar, following the EU Main Refinancing Rate release on Thursday at 12:45 GMT. The EUR/USD exchange currency rate lost 19 pips or 0.17% during a minute, right after the release. The European Single Currency continue trading at the 1.1380 area against the US Dollar.
The European Central Bank released the EU Main Refinancing Rate data in line with expectations of 0.00%.
According to Howard Archer, Chief Economic Advisor to EY ITEM Club, "ECB slightly trims its forecast of Eurozone GDP growth in 2019 to 1.7% from 1.8% seen in September. 2018 growth estimate cut to 1.9% from 2.0%. Growth still seen at 1.7% in 2020. 2021 growth forecast at 1.5%. Balance of growth risks broadly balanced but moving to downside."
Markets wait for Bank of England
On Thursday, the Bank of England will announce their rate decision. The event has caused moves from 26 to 97 pips since May 2018.On Friday the data releases will continue. During the morning hours, namely, at 09:30 GMT the UK Current Account will be published. This event causes moves from 15 to 45 pips.
The week's data will end at 13:30 GMT. At that time the Canadian Retail Sales and GDP data will be published. Simultaneously the US Durable Goods data sets and Final GDP will be released.
The above mentioned data release will be covered by Dukascopy Analytics. The event can be watched on our YouTube channel.
EUR/USD daily review
The EUR/USD had reached already the target of the short term daily review by the middle of the day's trading session. Namely, at 10:00 GMT it was already above the 1.1480 mark.In general, the rate most likely will consolidate its gains before surging up to the next technical resistance. Namely, next up is the 1.1513 level, where a pivot point is located at.
On the other hand, a decline is possible after gaining new high levels. It is called a retracement. A retracement could occur down to the support of the 50.00% Fibonacci retracement level at the 1.1462 mark.
Hourly Chart
After testing and piercing to lower trend line of a large scale almost horizontal channel's lower trend line since November, the EUR/USD seems to have finally left the trend line alone.
Namely, the pair has passed the 55-day SMA at 1.1410 and began a surge. By the middle of Thursday's trading session the pair had reached through the monthly R1 at 1.1477 and touched the 100-day SMA, which was providing resistance at 1.1480.
In general, on a larger scale, the rate could reach for the upper trend line of the most dominant descending channel pattern by slightly surging during the next couple of months.
Such a forecast is consistent with the fact that the European Central Bank intends to tighten their monetary policy next year. Meanwhile, the US Federal Reserve is signalling that their monetary tightening will be less than it was planned previously.
Daily chart
After the surge that occurred during the last 24 hours, Swiss Foreign Exchange Traders became slightly bearish, as 54% of trader open positions were short.
Meanwhile, trader pending orders in the 100-pip range were set to sell in 63% of cases.
In general, from the sentiment one can tell that the increase of the short sentiment was caused by long positions being closed due to profit taking and short positions being opened in expectations of a retracement downwards.
Moreover, there are traders expecting clear signals that a retracement has begun before shorting the pair. It can be stated by looking at the pending sell orders.