- SWFX market sentiment is 61% bearish
- Trader set up pending orders are 57% short
- Pair opened Wednesday's session at the 1.1277 level
- Aggregate daily technical indicators bet EUR/USD will surge
- Economic events to watch over the next 24 hours: US FOMC Minutes; French ILO Mainland Unemployment Rate (Q2); French ILO Unemployment Rate (Q2); French Mainland Unemployment Change (Q2)
Investor sentiment in the Euro zone's largest economy, Germany, improved less than expected in August, according to the latest monthly survey from the Mannheim-based Centre for European Economic Research (ZEW). The ZEW Index of investor confidence in the Euro zone's powerhouse rose to 0.5 points in the eight month of the year, compared to the 6.8 drop seen in July, when it slipped to the lowest level since November 2012 amid the United Kingdom's decision to leave the European Union. Nevertheless, market analysts anticipated an increase to 2.1 during the reported month. In the meantime, the assessment of the current situation climbed to 57.6 points in August, after declining to 49.8 in the previous month, whereas economic desks pencilled in a slight acceleration to 50.2 in the reported month. For the survey, ZEW questions analysts and institutional investors about their current assessment of the economic situation in Germany, as well as their expectations for the coming months. Separate report released by the ZEW institute on the same day showed an increase in confidence among analysts and institutional investors regarding the Euro zone, as its economic sentiment index for the region jumped to 4.6 points in August, following the 14.7 fall posted in the preceding month and surpassing the 6.3 decline forecast.
US core consumer prices grew less than expected last month, official data showed on Tuesday. According to the Department of Labor, the core Consumer Price Index (CPI) rose 0.1% on a monthly seasonally adjusted basis in July, compared to the 0.2% hike seen in the previous month. Economic desks expected the core CPI to remain unchanged from June. On an annual basis, core inflation increased 2.2% in the reported month, while market analysts predicted the indicator to come in at 2.3% in July, unchanged from last month. Including food and energy, consumer prices dropped to 0.0% month-over-month in the seventh month of the year, down from the 0.2% upturn registered in June, but in line with analysts' expectations. Year-over-year, inflation added 0.8% last month, compared to the 1.0% increase seen in the first month of summer. The US CPI data along with the latest retail sales figures added to concerns about the health of the US economy, raising doubts as to whether the Federal Reserve will increase interest rates this year, as it formally adopted a 2% inflation target back in January 2012. Meanwhile, other data released on Tuesday showed that building permits fell 0.1% to 1.152 million units in July, after rising 1.5% to 1.153 million units in the preceding month, while markets pencilled in an increase of 0.5% to 1.159 million in the reported month.
Upcoming fundamentals: FOMC Minutes and French unemployment
The only notable information, considering the strength of the US Dollar, on Wednesday will be the release of the Federal Open Market Committee Minutes at 18:00 GMT. The minutes will shed some light on the Fed's thoughts on the central bank's rate and monetary policy in general. However, that is not the only information, which will affect the EUR/USD pair during the next 24 hours. The French early birds are set to release unemployment data for second quarter of 2016 at 5:30 GMT on Thursday. The data will include ILO Mainlan Unemployment Rate and ILO Unemployment Rate and the Mainland Unemployment Change. ILO is the designation of a specific unemployment measurement method used by the French, and due to that the French also release the mainland unemployment change in nominal numbers.
EUR/USD tests the 1.13 mark
Daily chart: The common European currency surged and reached past the 1.13 mark against the US Dollar on Tuesday. However, the currency exchange rate retreated from the high level of 1.1322, and it has retreated back to the monthly R1 at 1.1263 by 5:00 GMT on Wednesday, against which the rate is most likely to rebound. Afterwards, the pair would move to the second weekly resistance at 1.1302 and test the 1.13 mark once again. In addition, a surge is also possible due to the fact that the upper Bollinger band has moved higher to 1.1318, compared to yesterday's 1.1299.Daily chart
Hourly chart: On the hourly chart it can be seen that the Euro appreciated against the US Dollar in the first half of Tuesday, as the currency exchange rate surged, steadily ignoring all of the resistance levels, and it went above the upper Bollinger band. With such a tempo the pair went from 1.1188 at 3:00 GMT on Tuesday to 1.1322 by 12:00 GMT. Afterwards, the pair retreated back to the monthly R1 at 1.1263 at 15:00 GMT, and it has been fluctuating just above the first monthly resistance since then.
Hourly chart
SWFX sentiment bearish on Wednesday
OANDA trader bearish sentiment has increased compared to Tuesday's 58.50%, as, at the moment, 62.44% of OANDA open positions are short. In the meantime, SAXO Bank clients have increased their bearish stance, as their open short positions are now at 70.22% compared to 67.06% of last trading session.