- 57% of pending orders are set to buy
- Long open positions are neutral
- Jul high at 1.1216 in focus of bullish attention
- Short traders to attempt crossing 100-day SMA
- Economic events to watch in the next 24 hours: Euro zone Trade Balance (Jun), German Bundesbank Monthly Report, US Empire State Manufacturing Index (Aug)
© Dukascopy Bank SA
Growth of the Euro zone's number one economy, Germany, accelerated in the second quarter, with GDP rising 0.4% following the modest 0.3% expansion in the January-March period. Analysts, however, had predicted a 0.5% growth rate. At the same time, the French economy stagnated, as exports were not robust enough to offset the impact of sluggish consumer spending and changes in inventories. The Euro bloc's third biggest economy, Italy, grew at a rate of 2% in the second quarter, versus a 0.3% advance estimated by economists.
The whole Euro zone economy grew by 0.3% in the second quarter, compared with the 0.4% expansion expected by economists. On top of that, price growth in the Euro area weakened further in July on a monthly basis, suggesting the region remains vulnerable to deflationary threats. Consumer prices in the currency bloc declined 0.6% on month in July. In annual terms, the gauge inched up by 0.2% in the reported month.
Watch More: Dukascopy TV
Upcoming fundamentals: EU trade surplus to decrease in June
Difference between exports and imports in the Euro area is expected to drop down to its lowest level since September 2014. In May the trade surplus stayed at 21.2 billion euros, while in June it is forecasted to decrease down to 19.3 billion euros. The data is due today at 9:00 GMT. Meanwhile, the benchmark manufacturing indicator for the US state of New York has probably risen to 5 points in August, the highest reading since March. This data is awaited by 12:30 GMT on Monday.
Read More: Fundamental Analysis
EUR/USD prepares for another downtrend
EUR/USD started suffering losses after reaching Jul high at 1.1216 earlier last week. The 200-day SMA seems to have successfully managed to limit gains of the pair and is pushing the Euro downwards at the moment. We would allow a slump down to the long-term downtrend at 1.10 in course of this week. However, bulls may rely on help from both 100 and 55-day SMAs at 1.1095 and 1.1062, respectively. Moreover, daily technical indicators are bullish; therefore, a decline of the pair is not inevitable in the beginning of the week.Daily chart
© Dukascopy Bank SA
In the one-hour chart we observe a stabilisation above the two-month downtrend line, which overshadows our bearish expectations from the daily chart's perspective. However, we note that Jul high and 23.6% Fibonacci retracement are still in place as major resistances. On the contrary, some support can be provided by 200-hour SMA, which is currently hovering upwards and has already crossed the downtrend at 1.1017.
Hourly chart
© Dukascopy Bank SA
Read More: Technical Analysis
SWFX sentiment turns to neutral, pending orders swing between gains and losses
Meanwhile, bullish positions at OANDA account for just 35.88% at the moment, while SAXO Bank market participants are also remaining strongly pessimistic towards the common currency, as the share of longs takes up just 27% on Monday.
Spreads (avg,pip) / Trading volume / Volatility
Average forecast says EUR/USD will trade at 1.09 by November
Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between Jul 17 and Aug 17 expect, on average, to see the currency pair just below 1.10 by the end of November. Though the majority of participants, namely 60% of them, believe the exchange rate will drop below this mark in ninety days, with 37% alone seeing it below 1.06. Alongside, 21% of those surveyed reckon the price will trade in the range between 1.10 and 1.16 by the end of November of this year. © Dukascopy Bank SA