- SWFX market sentiment is 54% bearish
- Pending commands in the 100-pip range 56% short
- Pair opened Thursday's session at the 1.1089 level
- Aggregate daily technical indicators bet EUR/USD will depreciate
- Economic events to watch over the next 24 hours: US Initial Jobless Claims (July 9); US PPI (June); Fed's Bullar Speaks; FOMC's George Speaks; Fed's Lockhart Speaks; Fed's Kaplan Speaks
According to the Mark Carney, criticism towards the Bank of England in the run-up to the EU referendum had been "extraordinary in all senses of the word". For the first time in more than seven years, economists are finally expecting some action from the Bank of England towards the UK interest rates during its first meeting after the Brexit referendum on Thursday. It is expected, that in order to calm financial markets and spur confidence after the Britons voted to leave the European Union, the central bank is widely seen to reduce its key interest rate to 0.25% from a current record low of 0.5%, where it has stood since March 2009. Currently, the BOE, is trying to find a balance of addressing the potential economic impact of a Brexit, without seen as siding with either political position. Philip Shaw, chief economist at Investec adds "Carney alluded to a range of available policy options, some of which were not used previously. We are at pains to identify exactly what the Governor might have in mind here. Dropping cash from helicopters (or a practical equivalent), has been ruled out by several central banks and we do not see this as a realistic possibility". Meanwhile, the BOE rate decision and minutes are going to be announced on Thursday.
Euro zone industrial production markedly worsened and even missed estimates in May, giving back almost all of the gains recorded the previous month in a fresh indication that an economic recovery which is now in its fourth year remains modest and vulnerable to new setbacks. According to the European Union's statistical office Eurostat, output in manufacturing, mining and utilities in the 19-nation bloc rose 0.5% year-on-year during the fifth month of the year, down from the 2.0% upturn seen previously. Analysts anticipated a deceleration to 1.4% growth in May. Industrial production across the 19 countries that share the euro has been highly volatile over recent months, jumping in some and slumping in others. Moreover, the indications for the second quarter are not encouraging, and consistent with other signs that growth was slowing even before the U.K. voted to leave the European Union on June 23, creating a period of uncertainty that the European Central Bank expects will slow the recovery. Many economists estimate the Euro zone economy slowed during the three-months to June, growing by between 0.3% and 0.4% after recording an expansion of 0.6% in the first quarter. However, a further slowdown seems likely over coming months.
Upcoming fundamentals: US data and Fed speakers
Thursday data and hints affecting the EUR/USD pair will come from the land of the opportunities, the United States. First of all at 12:30 GMT the US Initial Jobless Claims and the US PPI data will be published. The PPI will be monthly and yearly and also excluding or including food and energy. Afterwards at 14:00 GMT Fed's Bullard is set to give speech at the meeting of the Official Monetary and Financial Institutions Forum to discuss monetary policy and the role of the U.S. in the global economy, in St. Louis. However it will not be his only speech today, as he is also set to speak at 22:40 GMT on the same topic. In addition, George and Lockhart will give speeches at 15:15 GMT and Kaplan will express himself at 23:00 GMT.
EUR/USD surges to 1.1090 on Wednesday
Daily chart: The Euro surged marked a session of gains against the US Dollar on Wednesday, as the currency exchange rate increased from 1.1059 at the start of day's trading to 1.1090 at the end of the day. The pair passed the weekly pivot point at 1.1079, and it stopped exactly at the 200-day simple moving average. Thursday morning, the rate is continuing to move higher, as it reached 1.1108 mark by 4:45 GMT. On the way up, the exchange rate is set to move to the monthly PP at 1.1149. However, the 20-day SMA at 1.1128 will likely show some resistance to the pair.Daily chart
Hourly chart: On the hourly chart it can be seen that the EUR/USD pair traded almost flat until 6:00 GMT on Wednesday, when it dropped to 1.1047 by 8:00 GMT. However, afterwards the currency exchange rate surged to the middle of the resistance cluster made up from the weekly PP at 1.1079 and 200-hour SMA at 1.1087. The pair struggled with the resistance from 10:00 GMT until 13:00 GMT, and it surged afterwards to 1.1110 level. After the surge, the Euro depreciated against the US Dollar for five hours until 21:00 GMT. Since then the pair surged to the level of 1.1111 by 5:30 GMT.
Hourly chart
SWFX traders bearish on Thursday
OANDA trader bearish sentiment has increased compared to Wednesday's 56.97%, as, at the moment, 62.29% of OANDA open positions are short. In addition, SAXO Bank clients have increased their bearish stance, as their open short positions are now at 61.84% compared to 55.32% of last trading session.