- 58% of pending orders are set to buy
- Long open positions are slightly positive
- Bulls to wait for impetus from monthly PP/downtrend at 1.10
- Short traders to attempt crossing 55-day SMA on Tuesday
- Economic events to watch in the next 24 hours: US Housing Starts and Building Permits (Jul
Growth in Germany, the Euro zone's number one economy, is set to remain solid in the second half of the year supported by both the domestic and export economy, according to the Deutsche Bundesbank estimates. The optimistic outlook comes after Germany reported GDP growth rate of 0.4% in the second quarter, shy of forecasts for 0.5%. Nevertheless, Germany is seen benefitting from big real income gains at home, the Euro area's recovery, the weaker Euro and accelerating growth in the US and UK, two key trading partners, the German central bank said in a monthly economic report.
The Bundesbank also expressed confidence in Greece, arguing that the nation's economy would gradually recover, thanks to the bailout, tourism income and investments financed by European structural funds. However, the German central bank was more cautious on China, which unexpectedly devalued its Yuan last week, raising fears that its outlook is worse than earlier expected with growth at its slowest in more than two decades.
Upcoming fundamentals: US building permits to bounce back from eight-year high
Both US housing starts and building permits, which are always published at the same time, are going to be released on Tuesday. While the former are forecasted to rise up to 1.19 million in July on the back of positive permits' data from June, the latter are expected to decrease from their eight-year high. At the moment the average forecast for new building permits in July stays at 1.23 million, down from 1.34 million in a preceding month. The data is due today by 12:30 GMT.
EUR/USD established new bearish trend
EUR/USD is falling in value for a fourth consecutive trading day on Tuesday. Therefore, it seems that bears managed to receive enough negative momentum in order to revive the tendency of depreciation. The pair has crossed the 100-day SMA on Monday and the next immediate target is represented by 55-day SMA at 1.1058. However, in course of this week a decline towards 1.10 (monthly PP/downtrend) is possible as well, but bulls may try to hold the Euro above this important support area.Daily chart
In the one-hour chart the pair is moving along the two-month downtrend at the moment. Alongside, the 200-hour SMA is rapidly approaching the present exchange rate and is located within just 10-15 pips from the spot. EUR/USD's inability to pick up by receiving support from this simple moving average will mean that bears are prevailing on the market right now, and probability of a steeper drop will increase sharply.
Hourly chart
SWFX sentiment above 50%, pending orders positive for second day
Meanwhile, bullish positions at OANDA account for just 38.12% at the moment, while SAXO Bank market participants are also remaining strongly pessimistic towards the common currency, as the share of longs takes up just 29% on Tuesday.