- 58% of pending orders are set to buy
- Open positions remain below 50% for longs
- Bulls to set eyes on downtrend at 1.1040
- Short traders are still focusing on recent lows around 1.0848
- Economic events to watch in the next 24 hours: Italian CPI (Jul), German ZEW Economic Sentiment (Aug), US Unit Labour Costs (Q2) and Non-Farm Productivity (Q2)
Sentiment in the Euro area deteriorated in August, albeit to a limited extent, indicating the currency bloc is managing to weather a weakening global economy and uncertainty about the future of Greece. Sentix's index measuring morale among investors and analysts in the Euro zone dropped to 18.4 this month, compared with 18.5 in July. Economists, however, had expected a rise to 20.0 in the reported month. Investors' assessment of current conditions ameliorated slightly to 15.3, reaching the highest level since July 2011. At the same time, the index, which tracks expectations decreased to 21.5, down from 22.3 in July, hurt by weakening global economic momentum. A gauge tracking Germany, the Euro zone's number one economy, dropped slightly, with expectations declining and the current situation component climbing.
Meanwhile, Athens is seeking to conclude talks on a rescue programme by Tuesday, leaving enough time for national parliaments to assess the deal so funds can be disbursed for an August 20 payment to the European Central Bank. An accord for up to 86 billion euros in fresh loans to the debt-stricken Greece must be in place by August 20, when the repayment to the European Central Bank is due. Officials are optimistic an agreement will be reached, allowing Greece's parliament to pass any new required reforms in the middle of the week and paving the way for a meeting of the Eurogroup at the end of the week.
Upcoming fundamentals: US productivity gauge in focus on Tuesday
Markets are closely watching two important fundamental indicators from the US today, including labour costs and productivity for the second quarter of 2015. The former is expected to be unchanged quarter-on-quarter after a strong 6.7% surge back in Q1. Meanwhile, labour productivity is set to grow for the first time in three quarters, as the average expectation suggests a rise of 1.6% on a quarterly basis. Speaking to Bloomberg, the former Fed Chairman Alan Greenspan mentioned low productivity as one of the most important issues in the US economy nowadays. Both indicators are due today at 12:30 GMT.
EUR/USD corrects lower after testing recent highs
EUR/USD posted some decisive upward changes on Monday and tested recent lows/monthly PP at 1.10 for the first time since Jul 31. However, after touching a daily high at 1.1042 the pair decided to stop rallying and is now wavering below 1.10. With daily indicators staying neutral with respect to the short term perspectives, the Euro is not expected to decline substantially. Losses should be capped by 20-day SMA at 1.0970, even though a slump down to yesterday low/weekly PP at 1.0925 is also possible.Daily chart
Despite rapid growth the pair experienced yesterday, in the one-hour chart it is still hovering below the three-month downtrend, which is located above 1.1030. Therefore, the EUR/USD's neutral outlook is broadly unchanged at the moment. Gains are not guaranteed in the near term, unless the cross consolidates above the mentioned resistance.
Hourly chart
SWFX sentiment bearish, long pending orders climb
Meanwhile, bullish positions at OANDA account for just 37.57% at the moment, while SAXO Bank market participants are also remaining strongly pessimistic towards the common currency, as their share of longs takes up just 29% (-5%).