- SWFX market sentiment is 59% bullish
- Trader pending orders are 61% to sell
- Pair opened Wednesday's session at 1.0386
- Economic events to watch over the next 24 hours: Belgian NBB Business Climate; EU Consumer Confidence; US Existing Home Sales
German business morale rose to the highest level in December since February 2014, suggesting the country's businesses were not affected by Donald Trump's surprise victory in the US presidential elections. The Munich-based Ifo Institute said its Business Climate Index, which is based on approximately 7,000 monthly survey responses in the manufacturing, construction, wholesale and retail sectors, advanced to 111.0 from 110.4 points seen in November, while market analysts anticipated a slight acceleration to 110.7 in the reported period. Shortly after, the Bundesbank said the German economy is likely rebounded more strongly than initially thought in the last quarter of 2016 after expanding just 0.2% quarter-over quarter and 1.5% year-over-year in the Q3. Ifo also reported the Current Assessment Index climbed to 116.6 points in December, following the preceding month's 115.6 and surpassing analysts' expectations for 115.9. Furthermore, the Business Expectations Index, which measures how local businesses foresee the next six months, increased to 105.6 in the same month from November's 105.5, matching economists' projections. As a result, the Euro rose slightly against the US Dollar and British Pound, trading at 1.0468 and 0.8381, respectively.
Consumer prices in the Euro zone advanced in line with analysts' expectations last month, official data showed on Friday. According to Eurostat, the headline Consumer Price Index was revised up to 0.6% in November, the highest level since April 2014, from the preliminary reading of 0.5%, meeting economists' projections. Data also showed that the so-called core CPI, which excludes food, energy, alcohol and tobacco prices, rose 0.8% in the 11th month of the year, matching the flash reading and consensus forecast. The price of energy dropped 0.2% and 1.1% month-over-month and year-over-year, respectively. The cost of non-energy industrial goods held steady in November, while prices of services declined 0.3% on a monthly basis, growing 1.1% in annual terms. The latest PMI survey signaled strong inflationary pressures in the Euro zone industrial sector. Moreover, analysts widely expect the weaker Euro, combined with higher oil prices, boost inflation in the region during the upcoming months, suggesting the headline rate could move above 1.0%. After the release, the EUR/USD rose to around 1.047 after hitting the lowest level since 2003 after the Federal Reserve raised its interest rate on Wednesday.
Upcoming fundamental releases: Minor data on Wednesday
During Wednesday's trading session there are set to occur some fundamental data releases, which might affect the EUR/USD currency pair. From the EU there will minor data releases, as the Belgian NBB Business Climate is set to be out at 14:00 GMT. Afterwards at 15:00 GMT the EU Consumer Confidence data will be released. Meanwhile, after a quiet first half of the week in the US the Existing Home Sales data is set to be published at 15:00 GMT.
EUR/USD regains losses on Wednesday
Daily Chart: The common European currency surged against the US Dollar on Wednesday morning, as the currency exchange rate reached back above the 1.04 mark during the early hours of the day's trading session. The move seems to have occurred due to short traders cashing in on their profits before the currency pair reaches the 2003 low level at 1.0331, which is about to provide strong support to the Euro. However, the general downwards trend still persists, and sooner or later the pair is set to continue heading lower..Daily chart
Hourly chart: The hourly chart for the EUR/USD pair shows that the rate reversed its direction at 12:00 GMT on Tuesday. The reversal of direction occurred above the 1.0350 mark. The change of direction occurred when the currency exchange rate fell below the lower Bollinger band. Since then the pair has passed the 20-hour SMA, which provided resistance for seven hours. Most recently the pair has been squeezed in by the 20-hour SMA from the downside and the 55-hour SMA from the upside.
Hourly chart
SWFX traders remain bullish
SWFX traders remain bullish on the pair, as 59% of open positions were long. Meanwhile, 61% of pending commands were set up to sell the Euro.
OANDA trader bullish sentiment continued to slightly decrease on Wednesday, as 56.24% of open EUR/USD positions were long, compared to 57.85% on Tuesday. Meanwhile, SAXO bank traders had become slightly bearish, as 50.34% of open positions were short.