EUR/USD erased three-day losses

Source: Dukascopy Bank SA
  • Pending orders are strongly bullish (62%) on Thursday
  • Long open positions declined back to 51%
  • Bulls to meet tough resistance at 1.1132 (200-day SMA)
  • The closest obstacle for bears is represented by 100-day SMA at 1.1102
  • Economic events to watch in the next 24 hours: German PPI (Jul), US Unemployment Claims (Aug 14), Existing Home Sales (Jul) and Philadelphia Fed Manufacturing Survey (Jul)

© Dukascopy Bank SA
The common European currency remained buoyant on Wednesday, as markets preferred the Euro to the US Dollar amid disappointing fundamentals from the world's biggest economy. Inflation gauge in the US rose less than estimated in July, while Fed meeting minutes showed the FOMC wants to concentrate more on consumer price developments before hiking interest rates. EUR/USD has therefore climbed 0.8%, but the best performer of yesterday was EUR/CAD, which was up 1.3% due to oil prices reaching their fresh six-year lows. Meanwhile, the Swiss Franc was the only major currency to gain value versus the Euro, as uncertainty over Chinese growth is raising attractiveness of this safe-haven currency.

The Euro zone's current account surplus rose sharply in June, according to the ECB's data. The current account balance, showed a surplus of 25.4 billion euros in the reported month, up from 19.1 billion euros in May. The June figure was the highest level of the surplus since March, when it was 26.7 billion euros.

In the meantime, the German parliament ratified a new bailout deal for Greece, but a record number of lawmakers in Chancellor Angela Merkel's conservative parties rejected the aid programme, underscoring the political threat the Chancellor is taking in backing up Greece. The bill passed, but 63 lawmakers from Merkel's party, the Christian Democrats, voted against the bailout, while three abstained. It was supported by Merkel's coalition partners, the Social Democrats and the opposition Greens party. A "yes" vote in Germany's Bundestag was a major step toward clearing the final adoption of the bailout by Euro zone finance ministers.

However, some lawmakers doubt whether the Greek government is fully committed to implementing the terms attached to future disbursements as part of the aid programme. A first 13 billion euros payment is expected to flow today, when Greece faces redemptions on government bonds held by the ECB. The governments of Spain, Austria, the Netherlands and Estonia voted to ratify the Greek deal.

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Upcoming fundamentals: US homes sales in focus as decline expected



Existing home sales in the US are estimated to slump in July, down from 5.49 million to 5.45 million on a monthly basis. Therefore, the indicator may bounce back from its highest level since August 2013. In addition to property market data, the Federal Reserve Bank of Philadelphia will publish the results of its monthly manufacturing survey in the region, with the benchmark index forecasted to pick up for the month of July. Both mentioned indicators are due on Thursday at 14:00 GMT.


EUR/USD erased three-day losses

Bullish impetus created by weaker US CPI data and quite dovish Fed meeting minutes sent the most traded cross above 1.11 on Wednesday. A daily surge amounted to 90 pips, as EUR/USD is now trading above the Aug 16 high. With daily technical indicators still pointing to the upside, there is a possibility the Euro will continue rallying in the short-term. However, immediate resistance is represented by 200-day SMA at 1.1132, and unless this mark is penetrated our outlook remains neutral. Meanwhile, the next crucial supply is placed around 1.12 (monthly R1; Jul high).

Daily chart
© Dukascopy Bank SA

In the meantime, the one-hour chart also indicates the EUR/USD currency pair is ready for gains in the near term. It has successfully returned back above the 200-hour SMA, thus eliminating some of downside risks that were in place on Tuesday. Despite that, it seems that EUR/USD is now trading around the upper trend-line of a bearish channel that emerged in the past eight calendar days, which adds to the negative expectations with respect to the Euro.

Hourly chart
© Dukascopy Bank SA

SWFX sentiment above 50%, pending orders improve again

Sentiment towards EUR/USD among SWFX market participants fell to the level seen on Tuesday, as the share of bulls decreased back to 51% by Thursday morning. On the other hand, pending orders in 100-pip range from the current market price rallied 12 percentage points, as bulls (62%) have a significant advantage over bears (38%) at the moment.

Meanwhile, bullish positions at OANDA account for just 38% 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 28% on Thursday.













Spreads (avg,pip) / Trading volume / Volatility




Community members expect Euro to strengthen by the end of the week

© Dukascopy Bank SA

Traders see the pair to growing by Friday of this week, as the median forecast of Community members for the pair's close price on August 21 is 1.115. According to Fundamental Analysis Contest, majority of respondents believe that the upcoming data will have a bullish impact on the Euro vs US Dollar.


A proponent of a near-term growth, Khimitau, suggests that "the pair runs on a range consolidation between 1.0808 and 1.2220. After six days of bullish market and two days of bearish one I am expecting some support around 1.08."

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 20 and Aug 20 expect, on average, to see the currency pair around 1.09 by the end of November. Though the majority of participants, namely 59% of them, believe the exchange rate will be strongly below 1.10 in ninety days, with 38% alone seeing it below 1.06. Alongside, 20% 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

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