- Buy orders jump to 70%
- Sentiment remains slightly bearish
- Focus is now on the July low
- Falling trend-line and the monthly PP at 1.1150 continue to act as a ceiling
- Upcoming events: US Advance GDP, Goods Trade Balance (Jun), Unemployment Claims
Even though German consumers remained optimistic, they voiced concerns about the country's economic situation due to uncertainty about Greece's financial stability. According to the GfK research group, the forward-looking consumer confidence index remained flat at 10.1 points for August from July. However, the poll of 2,000 consumers revealed a significant decline in economic expectations, which decreased by 6.5 points this month and have lost almost 20 points in two months. Moreover, the GfK survey showed Germans felt more upbeat about their future income than at any point since Germany reunified in 1990, in light of high employment and strong pay hikes. Shoppers, nonetheless, were reluctant to make purchases, which GfK assumed could be due to waning optimism about the overall economic outlook.
According to Andres Fuentes Hutfilter, a senior economist with OECD, the risks from the Greek crisis to the German economy are "limited". The analyst noted that the German stock market did notice the news from Greece, but did not react in "a very dramatic way". However, the economist highlighted that the recent events had an impact on the economic prospects and stability of the whole Euro area, which in turn is important for Germany. Hutfilter expects German economy to grow 1.8% this year.
Spanish retailers saw an accelerated turnover, with sales rising at a faster pace, the National Statistics Institute reported. Retail businesses posted an annual 3.8% growth in June, compared with the 1.8% increase in the prior month. Meanwhile, the adjusted figure climbed 2.3% in annual terms, following the 3.1% growth reported in May. Spanish shoppers may be willing to dig into their wallets in line with the gradually improving labour market. Unemployment numbers are gradually declining in Spain, although the country still has the second highest jobless rate in the euro area - behind Greece.
US GDP to rebound; unemployment claims to increase
The European portion of the data releases is already out, and the next cluster of volatility is expected around 12:30 p.m. GMT because of important US data, such as the estimate of GDP growth, unemployment claims, and the first ever release of goods trade balance, which is reported by Bureau of Economic analysis. The latter figure shows the difference between the goods imported and exported during the month. Its value is in the fact that the release is a week before the trade balance.
EUR/USD aims for July's low
Since there is no more threat to the resistance trend-line, the focus is now on the July low. The currency pair is expected to pierce through all the nearby supports and make a notable bullish correction only in the region of 1.08. Once this support is out of the way as well, the next target will be this year's current low at 1.0460, although we may feel the buying pressure a little earlier, near the level of the April's minimum at 1.0520.Daily chart
Yesterday in the hourly chart EUR/USD violated the bullish channel. And while initially we expected the Euro to retrace some of the losses, the price fell straight to the 200-hour SMA, which is unlikely to hold for long and trigger even a small rally. Today's target is Jul 24 low at 1.0925.
Hourly chart
Buy orders jump to 70%
The negative bias among the traders of some of the other brokers is stronger. For example, only 38 and 39% of OANDA and Saxo Bank traders, respectively, are long the Euro.
Spreads (avg,pip) / Trading volume / Volatility
Community members expect Euro to weaken in the short run
Participants of the weekly poll among Dukascopy Community members have a strong negative bias towards EUR/USD. The average forecast lies between 1.06 and 1.05, although the most popular interval among the surveyed was 1.08-1.07 with more than 17% of the votes.
A proponent of a near-term rally, Tommaso, ponders that "the elusive parity between the Euro and the US Dollar could be the August-September target for the pair; but this "race" still requires a better position". He thinks "this "position" can be achieved during the July 26th - 31st week, with a correction at the 1.1000 level". One of his opponents, a community member with a nickname Csongor_George_Pal, expects the Fed to raise the federal funds rate to 0.35%, which in turn will negatively affect EUR/USD.
Judging by the average forecast, 1.1002, survey participants do not expect the Euro to move in either direction during the next three months. In reality, there are significantly more bears (57%) than bulls (43%) because the bears gave somewhat less extreme forecasts than the bulls. Meanwhile, the most popular answer, which collected 20% of all the votes, was a price interval between 1.04 and 1.02.