- SWFX market sentiment is 55% bullish
- Trader pending orders are 60% to sell
- Pair opened Thursday's session at 1.0489
- Upcoming Events: US ADP non-farm employment change; US unemployment claims; US ISM manufacturing PMI; US crude oil inventories
Consumer prices increased rapidly in the Euro zone last month, official figures revealed on Wednesday. According to Eurostat, the Consumer Price Index came in at 1.1% year-over-year in December, after rising 0.6% in the preceding month. This was the strongest rate since 2013 and the first time the index remained above 1.0% for over 36 months. The Core CPI, which kept the overall inflation rate lower in 2016, advanced from 0.8% to 0.9% and topped economists' expectations for an unchanged reading. On a yearly basis, energy prices advanced 2.5% in December after a 1.1% slump in November. Drink and food prices increased 1.2% from 0.7% past month. In the meantime, non-energy industrial goods held steady at 0.3%, compared with a 0.5% rise in December 2015. Services inflation climbed slightly to 1.2% from 1.1%. Last month's growth in consumer prices was mainly driven by higher oil prices that reached near 18-month highs. The December growth in consumer prices is expected to boost inflation in the near future, which is expected to rise at least 1.5% in the upcoming months. After the release, the Euro depreciated against the US Dollar to trade at $1.0430.
Americans became more optimistic about the economy in December since the postelection bump in confidence continues. As data suggest the US consumer confidence reached its highest in more than 15 years during the previous week as Americans expect more strength ahead in business conditions, stock prices and the job market following the election of Donald Trump as president in November. According to the Conference Board the Consumer Confidence Index advanced to 113.7 in December from an upwardly revised 109.4 in November. Meanwhile, the data topped estimates in a Reuters poll for a reading of 109.0. Another reason for the gain in confidence is surging optimism among older Americans. Economists follow confidence indicators because upbeat consumers are more likely to increase personal spending, which makes up most of the US economy.
Upcoming fundamental releases: US unemployment claims; US ISM manufacturing PMI; US crude oil inventories
Decent volatility could arise for the US Dollar during Thursday's trading session due to a set of high impact data releases in the afternoon. The ADP non-farm employment change along with unemployment claims come out at 13:15 GMT and 13:30 GMT respectively, while a surprise in the ISM manufacturing PMI could spill in some volatility at 15:00 GMT. The day will conclude with US crude oil inventories at 16:00 GMT.
EUR/USD overshoots Thursday morning
Daily Chart: EUR/USD topped expectations and is now attempting to conclusively break the upper boundary of the ascending channel pattern on the hourly chart. The pair managed to dash through resistances at 1.0505 and 1.0513 before overstepping the trend-line in a prominent green candle for the morning session. We will look for the rate to erase some of the gains in order to stay below 1.0533, while an alternative scenario would lead to tests of 1.0580, the monthly Pivot Point. Nevertheless, risk will be skewed generally to the upside until mid-February or early March when the upper senior boundary comes into play.Daily chart
Hourly chart: The hourly chart shows that the extended uptrend remains strong, maintaining a channel-like formation with a strong upper trend-line. Yet, it is still inconclusive if the pattern is indeed broken as the pair has not approached the highs of the previous trend-line violation of 1.0589, meaning that the hourly chart alternative to the daily chart channel remains intact. The 1.0573/80 area which is being tested now, could refuse access to levels below, leading to a re-entry into the pattern during today's trading session.
Hourly chart
Bullish sentiment persists
SWFX traders remain long on the pair, as 55% of open positions are long. Meanwhile, 60% of trader set up orders are to sell the Euro.
OANDA traders also remain bullish, as 53.15% of open EUR/USD positions were long on Thursday. Meanwhile, SAXO bank traders increased their bearish outlook, as 41.32% of open positions were long, compared to 46.33% before.