- Market sentiment remains moderately bullish (53%)
- Pending orders are divided equally between traders
- Bulls to challenge 1.1260 for second time on Wednesday
- Daily technical indicators project losses for the Euro
- Economic events to watch in the next 24 hours: German Retail Sales (Aug) and Unemployment Rate (Sep); Italian CPI (Sep); Euro zone CPI (Sep) and Unemployment Rate (Aug); FOMC Member Dudley Speaks; Fed Chair Yellen Speaks; FOMC Member Brainard Speaks; FOMC Member Bullard Speaks; US ADP Non-Farm Employment Change
The Eurozone's economic confidence showed some improvements in September, as demonstrated by survey data from the European Commission. The economic sentiment index climbed to 105.6 in September from August's 104.1. The advance in the Euro zone's sentiment was mainly caused by improvements in retail trade, industry, and services. The confidence gauges for corresponding sectors rose to -2.2, 4.1, and 12.4 from last month's -3.7, 3.5, and 10.1, respectively. In the meantime, Spanish retail sales experienced a growth for the 12th month in a row in August, despite the fact that the growth rate was slightly lower than that of July. In August, retail businesses of the Eurozone's fourth largest economy jumped up 3.2% on an annual basis, which was in line with economists' expectations.
As to the Germany's inflation, the preliminary reading showed that consumer prices shrank 0.2% month-on-month in September, compared to the flat gauge in the prior month. Meanwhile, markets expected to see a 0.1% decline in the ninth month of the year. In annual terms, the cost of living in Germany stayed flat in September, following a 0.2% gain in August and missing expectations of a 0.1% increase. Negative inflation in the Euro zone's number one economy added to ECB's headache, as the bank set the inflation target of below, but close to, 2%.
Upcoming fundamentals: Will the Euro zone slide back into deflation?
The mean estimate assumes that consumer prices in the Euro zone (9:00 GMT) will be unchanged in September; however, downside risks remain in place and the indicator may still plunge back below zero. Alongside, several FOMC members are due to talk on Wednesday. Among them, the most important speaker will be the Fed Chair Janet Yellen who will deliver opening remarks (19:00 GMT) at the Fed's annual community banking conference in St. Louis. We will also hear from New York Fed President William Dudley (12:00 GMT), St. Louis Fed President James Bullard (19:00 GMT) and Fed Governor Lael Brainard (Wednesday midnight).
EUR/USD remained flat below 1.1260 on Tuesday
Neither bulls nor bears managed to take control over the market on Tuesday as the EUR/USD cross finished the trading session with literally no change in value. However, there were attempts to climb above the 1.1260 supply (monthly PP; 50% Fibonacci retracement of Jul-Aug uptrend). In case bulls fail to accomplish this goal on Wednesday, the attention will be turned to be downside as bearish risks will increase. Short traders are setting eyes on 200-day SMA at 1.1177, while their intentions are supported by daily technical indicators.Daily chart
Based on the performance of EUR/USD in the one-hour chart, the outlook seems to be slightly brighter than in the daily chart. The main reason is location of the spot price above the 200-hour SMA, currently at 1.1225. However, the spread between the spot and moving average amounts to just 20 pips, meaning that advantage is insignificant.
Hourly chart
Share of bulls unchanged at 53%
Meanwhile, bullish open positions at OANDA decreased from 44.22% to 41.73%, while SAXO Bank traders are also remaining largely pessimistic with respect to the common currency as their portion of the longs stays at 30% today.
Spreads (avg,pip) / Trading volume / Volatility
Community members forecast the Euro to grow against the US Dollar this week
On a weekly basis, the sentiment has improved significantly, as almost 63% of participants in our weekly quiz expect the Euro to rebound versus the Greenback.
Among traders, khalidamassi suggests says that "EUR/USD was supported last week around 1.11 as it recovered slightly towards 1.12, so 1.11 will be the minor support this week, which may send the pair towards 1.14 if US employment is not good. But the new surge in US employment or lower unemployment rate should give a boost for USD, especially after Yellen's last speech about raising rates before year-end."