- SWFX market sentiment is 51% bearish
- Trader pending orders are 58% to sell
- Pair opened Tuesday's session at 1.0597
- Upcoming Events: US PPI; Fed Chairwoman Janet Yellen's speech; FOMC Member's Kaplan's speech
On Monday, the European Commission released its latest set of economic forecasts, suggesting that the Brexit vote and elections in Germany and France would have a significant impact on the Euro zone economy. The latest estimates suggest the region's economy is likely to expand 1.6% in 2017, following the preceding year's growth pace of 1.7%. However, it is highly expected to regain footing in 2018, growing at an annualized pace of 1.8%. Back in November, the Commission estimated the Euro zone's economy would grow 1.5% this year and 1.7% in 2018. The region's largest economy, Germany, is set to expand 1.6% in 2017, down from 1.9% in 2016.
Meanwhile, economic growth is expected to climb from 1.2% to 1.4% in France, and keep steady at 0.9% in Italy. The key reason for the upward revisions to the forecasts was stronger than expected performance in the second half of 2016. The Commission also revised up its forecasts for the UK economy, despite the Brexit vote. The British economy is set to expand 1.5% in 2017 and 1.2% in 2018, compared to a 2% growth pace in 2016. In November, it said the economy would expand just 1% in 2017. The 2018-year growth forecast remained unchanged. In 2016, the British economy outperformed all other G7 economies. The Commission also said inflation would hit 1.7% this year but drop to 1.4% in 2018.
Upcoming events: Data releases on Tuesday
On Valentine's Day, statisticians are set to release a lot of macroeconomic data. In the second half of Tuesday's trading session information from the US will be coming out. At 13:30 GMT US PPI data will be published. Later in the day members from the Federal reserve are set to speak, as at 15:00 GMT Janet Yellen will give a speech and at 18:00 GMT FOMC Member Kaplan will speak. Most attention will be paid to Janet Yellen, as the loss of volatility caused by the expectations of her speech can already be seen across the board.
EUR/USD finds support at 1.06 mark
Daily Chart: As it was forecasted before, the common European currency found support against the US Dollar in the 55-day simple moving average, which on Tuesday was at 1.0604 level. However, the forecast of a decline of the Euro against the Greenback still remains intact, as the latest rebound is seen as a consolidation after three consecutive trading sessions of losses for the Euro. The next level, where the pair will be heading is the weekly S1, which is located at 1.0568. Although, it is unclear where exactly the rate will encounter resistance, which will propel it lower.Daily chart
Hourly chart: After a full reexamination of the hourly chart two descending channels were found, as the pair is declining in them. At the moment, the currency exchange rate is trading in a range between two trend lines of various descending channel, and the rate is surely set to move lower to the 1.0568 mark. In addition, the before mentioned resistance, which will propel the rate lower is a whole cluster on the hourly chart near the 1.0625 level, where the upper Bollinger band, a trend line and the 55-hour SMA are located at.
Hourly chart
SWFX traders almost neutral
SWFX traders have not changed their opinion, as 51% of open positions are long on Tuesday. In the meantime, 58% of trader set up orders are to sell the Euro.
OANDA traders also remain neutral bullish, regarding the pair, as 53.78% of open EUR/USD positions were long on Tuesday. In addition, SAXO bank traders have decreased their bearish outlook, as 52.39% of open positions are short, compared to 54.18% previously.