- SWFX market sentiment is 57% bullish
- Trader pending orders are 65% to sell
- Pair opened Monday's session at 1.0532
- No economic events to watch over the next 24 hours
Mood of American shoppers improved markedly in December, following Donald Trump's surprise victory in the US presidency elections, official figures revealed on Friday. The University of Michigan reported its preliminary Consumer Sentiment Index jumped to 98.0, the highest reading since January, while marked analysts anticipated a slighter improvement to 94.3 from November's 93.8 points. Confidence among consumers rose shortly after the elections. The Current Conditions Index, which measures the way consumers feel about the present state of the economy, advanced to 122.1 in December from the preceding month's 117.3 points, the highest level since 2005. A record number of survey respondents pointed to the positive effects of new policies. Furthermore, the survey showed the proportion of people expecting the economy and labor market to improve next year also increased in the reported month. The gauge of expectations six months from now climbed to 88.9, the highest since January 2015, following the prior month's 85.2 points. Consumers' inflation expectations for the next year declined to 2.3%, the lowest level since 2010, compared with November's 2.4%, while their expectations for inflation over the next 10 years fell to 2.5% from 2.6%.
The Euro zone's bond markets tumbled shortly, while the Euro moved markedly higher after the European Central Bank signalled on Thursday that it would begin to cut back the stimulus program starting from April 2017. The ECB said it would lower its 80 billion euros monthly asset purchases to 60 million euros but prolong the QE asset buys until December next year., pointing to low inflation that, according to the latest forecasts, was projected to achieve only 1.7% in 2019. In the meantime, market analysts expected the Central bank to leave its asset purchases at the current levels for 6 more months. The Bank bought 1.4 billion euros in bonds since the start of the QE program. The ECB kept its inflation forecast unchanged at 0.2% for 2016 but revised it slightly up to 1.3% and 1.5% for 2017 and 2018, respectively. The Bank also left its benchmark and deposit rate at 0.0% and –0.4% , respectively, in line with economists' expectations. Overall, the Euro zone's recovery remained solid despite Britain's decision to leave the European Union and Donald Trump's surprise victory in the US presidential elections. After the announcement, the Euro initially jumped to 1.0875 against the US Dollar but failed to hold the momentum, falling back to 1.0753.
No economic events to watch over the next 24 hours
While there are no high impact economic events that could shake up the EUR/USD market on Monday, the pair will feel some fundamental pressures on Wednesday when the United States will be in spotlight amid loads of fundamental data releases.
EUR/USD lacks levels in sight
Daily Chart: While still remaining its track towards the bottom boundary of the senior three-month channel, EUR/USD posted a green candle Monday morning. The pair dashed through the bottom Bollinger Band – November low at 1.0552/54, which was the single resistance level solid enough to put up some supply pressures and push it of the track. The next level to stick on to lies just at 1.0646, and is unlikely to be attacked during today's session. We still expect the general motion to remain bearish both in the short and long-term, as the pair makes its way towards the bottom trend-line of the descending channel.Daily chart
Hourly chart: The hourly chart shows the pair hovering around the 1.0552 mark, setting the market almost in balance to extend a ranging motion. The pair is currently testing the 20-hour SMA at 1.0565 and will face 1.0585, the upper Bollinger Band if the movement continues north. Otherwise, the bottom Bollinger Band at 1.0545 will cut the losses for now, showing the same lack of significant levels as the daily chart did. With various time-frame SMAs lying above the rate, the overall theme is definitely bearish.
Hourly chart
Sentiment remains bullish
Traders show an improvement in sentiment with 57% of positions being long, while pessimism reflects in pending orders with 65% of short positions.
OANDA traders improved their bullish outlook, as 64.53 of open EUR/USD positions were long on Monday morning, compared to 60.94% % on Friday. In addition, SAXO Bank clients have also upped their outlook with 51.71% of all positions being bought, compared to 48.78% on the previous trading session.