- SWFX market sentiment is 55% bullish
- Trader pending orders are 64% to sell
- Pair opened Wednesday's session at 1.0616
- Economic events to watch over the next 24 hours: US core retail sales; US PPI; US retail sales; US Crude oil inventories; FOMC economic projections; FOMC statement; Federal funds rate; FOMC press conference
US import prices dropped markedly last month after two consecutive monthly gains, amid the lower cost of imported petroleum and stronger US Dollar. According to the US Department of Labor, import prices fell 0.3% in November, the biggest decline since February, following the previous month's downwardly revised gain of 0.4% and meeting analysts' expectations. On an annual basis, import prices decreased 0.1%, the smallest fall since July 2014, compared to October's drop of 0.3%. Last month's drop in import prices is unlikely to impact expectations that the Fed will raise rates at the end of its two-day policy meeting on Wednesday this week. The Greenback's surge and a plunge in oil prices between June 2014 and December 2015 dampened import price inflation. Imported petroleum prices declined 4.7% in November, the biggest drop since February, following the prior month's increase of 7.3% and offsetting a 10.6% rise in the price of imported natural gas. Excluding petroleum, import prices held steady last month, compared to October's 0.1% decline. The report also showed that export prices fell 0.1% in the same month, after climbing 0.2% in October. Yearover-year, they dropped 0.3% in November, the smallest decrease since August 2014, after dipping 1.0% on the same basis in October.
TThe Euro zone's employment growth slowed in the September quarter, official figures revealed on Tuesday. According to flash figures published by Eurostat, the number of employed persons climbed 0.2% in the Q3, down from the preceding quarter's gain of 0.4%, whereas economists expected an increase of 0.3%. However, there were 153.4 million employed in the region, the highest level since the Q4 of 2008. On a yearly basis, employment growth increased 1.2% in three months to September, following the prior quarter's 1.3% rise. Other data released on the same day showed German economic sentiment remained unchanged in December amid the looming banking crisis in Italy and upcoming elections in the Euro zone's largest economies The Mannheim-based ZEW Institute's Economic Sentiment Index came in at 13.8, unchanged from November, while market analysts anticipated a slight acceleration to 14.2. In addition, the figure was below its log-term average pf 24.0 points. Meanwhile, the Current Conditions Index advanced to 63.5 in December, indicating positive trends within the German economy, whereas markets expected the Index to hold steady at 58.8 in the reported month.
Upcoming fundamental releases: US retail sales; US PPI; US Crude oil inventories; FOMC statement; Federal funds rate
With a multitude of high impact fundamental data being released on Wednesday, markets are bound to be shaken up by surprise reactions, which could cause both false and credible breakouts of levels of significance. 13:30 GMT will bring US core retail sales, US retail sales and month on month PPI, while crude oil inventories come out at 15:30 GMT. Another time that is bound to bring uncertainty will be 19:00 GMT, when the Federal Funds rate, accompanied by the FOMC statement and projections and released and concluded with a press conference at 19:30 GMT.
EUR/USD distracted from downwave
Daily Chart: As expected, EUR/USD posted a red candle and created a long legged candle amid volatile intra-day movements. The pair opened Wednesday's session on a bullish note, testing the weekly Pivot Point at 1.0646. Considering the bearish nature of the current motion towards the bottom trend-line of the two-month channel, therefore we would expect the gains to be cut sometime soon in order to maintain the intended track. The next resistance lies at 1.0679 and support – at 1.0564, and based on the channel still being intact, we would expect a red candle today.Daily chart
Hourly chart: The hourly chart shows a volatile but ranging market with a demand zone at 1.0605 and resistance at 1.0643, which has recently let the pair overstep it to possibly extend a surge. It now appears that the pair might be once again launching an attack at the upper trend-line of the channel. On the other hand, a rising wedge has been sketched, meaning that the uptrend might later reverse. It, however, appears that the 55 and 100-hour SMAs are about cross over, signalling bulls to enter the market.
Hourly chart
Sentiment remains bullish
SWFX traders slightly upped their bullish sentiment to show 55% of all positions being long, compared to 54% on Tuesday. Pending orders, however, entered deeper pessimism with 64% (+1%) of commands being to sell the pair.
OANDA traders improved their bullish outlook, as 57.81% of open EUR/USD positions were long on Wednesday morning, compared to 64.53 % % on Tuesday. However, SAXO Bank clients have entered a slightly pessimistic territory with 45.97% of all positions being bought, compared to 48.78% on the previous trading session.