- Pending orders held by bulls dropped into the red (44%)
- Long and short open positions are distributed equally
- Bulls to attempt prolonging rally beyond Aug 24 high of 1.1714
- Short traders are looking for momentum from 2005 low at 1.1637
- Economic events to watch in the next 24 hours: German Revised GDP (Q2) and IFO Business Climate (Aug), US Services PMI (Aug), CB Consumer Confidence (Aug) and New Home Sales (Jul)
Activity in the Euro zone manufacturing sector remained robust in August, while services also kept momentum. The flash manufacturing PMI for the 19-nation region came in at 52.4 points this month, the same as in July, whereas analysts had predicted a slight setback to 52.2. At the same time, the currency bloc's services PMI climbed to 54.3 points, compared with 54.0 in the preceding month. As a result, composite PMI increased to 54.1, up from 53.9 in July.
In Germany, the Euro zone's powerhouse, manufacturing sector remained firmly in expansion, with the flash manufacturing PMI surging to 53.2 points in August, up from 51.8 a month earlier. The services sector also enjoyed a robust activity growth in the measured month, with the corresponding gauge coming in at 53.6. Meanwhile, consumer confidence in Germany was hit by the escalating Greek debt crisis, with the forward-looking Gfk consumer climate sliding to 9.9, down from 10.1. In France, factories failed to regain momentum this month, as flash manufacturing PMI declined to 48.6, from 49.6 seen in July. The reading stayed below the crucial 50-mark, which separates contraction from expansion. However, the flash services PMI stayed above the threshold, coming in at 51.8, compared with 52.0 in July.
Upcoming fundamentals: German business climate to deteriorate in August
Judging from mean economists' expectations, the IFO Business Climate gauge for Germany is going to decline from 108 points in July down to 107.8 points this month. At the same time, the current assessment is likely to be flat for the second consecutive month at 113.9 points. The business sentiment index tracks current conditions and business forecasts in the Euro zone's largest economy, as the IFO Institute surveys more than 7,000 enterprises across the country. The data is due today at 8:00 GMT.
EUR/USD keeps gains above 1.15 after 300-pip surge
Yesterday's panic, which was caused by fears that the crash of Chinese stock market may hammer global economic recovery, made the Euro a safe-haven currency against the Dollar. EUR/USD climbed more than 300 pips in just one trading day and crossed the crucial resistance represented by the 2005 low at 1.1637. The peak was reached at 1.1714, after which the Greenback managed to pare losses down to 1.1580. Despite that, the present market volatility may fuel the pair for new gains, while bulls are now setting eyes on a new supply at 1.1756 (2004 low).Daily chart
In the one-hour chart the pair seems to be returning back into the boundaries of the bullish pattern, which has been emerging since Aug 19. However, as long as EUR/USD is trading above the 1.15 major level, it will be expected to move further upwards.
Hourly chart
SWFX sentiment changes to neutral, pending orders drop below 50%
Meanwhile, bullish positions at OANDA account for just 38.36% (+5%) at the moment, while SAXO Bank market participants are also remaining strongly pessimistic towards the common currency, as the portion of longs takes up only 41% of all open trades by Tuesday morning.