- SWFX market sentiment is 61% bearish
- Trader set up pending orders are 55% short
- Pair opened Thursday's session at the 1.1263 level
- Aggregate daily technical indicators bet EUR/USD will surge
- Economic events to watch over the next 24 hours: German IFO Business Climate (Aug); German IFO Current Assessment (August); German IFO Expectations (August); US Durable Goods Orders (July); US Initial Jobless Claims (Aug 20); US PMI Services (August); US Jackson Hole Symposium
Existing home sales in the United States dropped more than expected last month after rising for four consecutive months, official figures revealed on Wednesday. According to the National Association of Realtors, sales fell 3.2% to a seasonally adjusted annual rate of 5.39 million units in July, compared to the preceding month's reading of 5.57 million, whereas market analysts anticipated a 0.3% decline to 5.52 million in the reported month. US home resales were 1.6% lower than a year earlier. Nevertheless, analysts view the drop in existing home sales as temporary and expect these sales to pick up soon. Home resales declined in the Northeast, the South and the Midwest; however, jumped 2.5% in the West. Meanwhile, the number of unsold homes on the market increased 0.9% in the seventh month of the year, whereas supply fell 5.8% and the median house price advanced 5.3% year-over-year to $244,100. Other data released by the Energy Information Administration on Wednesday showed a surprise increase in US crude oil inventories. According to the report, US crude stockpiles added 2.5 million barrels in the week ended August 19, following the 2.5% drop seen in the previous seven weeks and surpassing the 0.5 million-barrel fall forecast. After the release, Brent oil declined 1.5% and WTI dropped 1.8%, both trading below the $50 level.
The Eurozone's economic powerhouse has confirmed an economic deceleration in the second quarter of 2016, the second reading of the gross domestic product showed. The growth rate of gross domestic product reached 0.4% or an annualized rate of 1.7% during the second quarter of 2016, confirming the preliminary estimate published by German statistical authority Destatis earlier this August. It marks a significant slowdown from the first quarter, when the economy expanded at a quarterly clip of 0.7%, as the mild winter weather propelled construction. The outcome is in line with an earlier GDP flash estimate. Meanwhile, the continent's traditional exporting powerhouse saw outbound shipments rise 1.2 per cent in the second quarter, with imports slipping 0.1 per cent. Overall, net trade was the biggest single contributor to economic growth, adding 0.6 percentage points to GDP. In addition, domestic consumption, which has been powering the economy for the last 18 months, added 0.2 percentage points, while investment contributed negatively, deducting 0.4 percentage points from the GDP numbers. However, tin a separate news release, Destatis said that Germany registered a budget surplus of 1.2% of GDP in the first half of the year, but cautioned against drawing conclusions for the full year.
Upcoming fundamentals: Data releases and financier symposium
This Thursday will be a busy day for the EUR/USD pair, as there are various data releases and a two day Symposium begins in the US, which brings together finance professionals from around the whole world. First of all at 8:00 GMT the German IFO institute indices for August will be released. There will be three indices, as IFO Business Climate, Current Assessment and Expectations will all be released simultaneously. Afterwards, at 12:30 GMT data from the US will be published, as US Durable Goods for July and US Initial Jobless Claims for August 20 will be out, and the release will be covered by the Dukascopy team live on the webinar. At 13:45 GMT US PMI Services for August will be out, and it will also affect the strength of the US Dollar. However, most important might be the information that will flow form the press conferences happening at the Jackson Hole Symposium of finance professionals, which begins at 14:00 GMT.
EUR/USD breaks out of pattern on Wednesday
Daily chart: On Thursday morning the currency exchange rate found support in the monthly R1 at 1.1263 and slightly rebounded. However it faces the weekly PP at 1.2806 from the upside, which might mean a flat trading session for the rate during today's trading session. However, afterwards it is most likely going to surge, as the SMAs approach from the south. Previously the common European currency depreciated against the US Dollar on Wednesday to such an extent that it fully discarded the previous pattern.Daily chart
Hourly chart: The hourly chart for EUR/USD pair shows that the currency pair hit the 20-hour SMA at 1.1304 around 8:00 GMT, and it bounced off the resistance provided by the simple moving average. Afterwards, the rate fell down to the level of 1.1258 by 15:00 GMT, where it changed direction. The rate bounced back to the monthly R1 at 1.1263, which hindered the pair's movements until 00:00 GMT on August 25. Then the rate bounced up to the 20-hour SMA at 1.1272, by which the exchange rate has stuck to. However, it is clear that the EUR/USD pair will surge to at least the 1.1281 level, where the weekly PP and 200-hour SMA are located at.
Hourly chart
Trader bearish sentiment decreases
OANDA trader bearish sentiment has decreased compared to Wednesday's 65.78%, as, at the moment, 63.35% of OANDA open positions are short. In addition, SAXO Bank clients have decreased their bearish stance, as their open short positions are now at 67.65% compared to 68.66% of last trading session.