- Pending orders held by bulls are down ten percentage points to 45%
- Long open positions have rebounded from 42% to 44%
- Strongest resistance is placed at 1.1409/66
- Short traders to aim at 1.1130/12 demand cluster
- Economic events to watch in the next 72 hours: Spanish Retail Sales (Jul) and HICP (Aug); Italian Business Confidence (Aug); Greek Revised GDP (Q2); Euro zone Business Climate (Aug); German CPI (Aug); US Personal Spending (Jul), Goods Trade Balance (Jul) and Consumer Sentiment (Aug); Jackson Hole Symposium (Day 2-3); Fed Stanley Fischer Speech
Business morale in France rose to the highest level in four years amid low oil prices and a weaker Euro. Business confidence index climbed to 100 in August, the highest reading since 2011, according to INSEE. Analysts, however, had predicted the gauge to remain at 99, the same level as in July. The improvement in the French business climate indicates the Euro zone's second biggest economy is recovering, even though economic data remain dismal. The French Finance Ministry and the International Monetary Fund expect that economic growth in 2015 will reach 1%, compared with an average of less than 0.5% in the previous three years.
Meanwhile, the Spanish economy managed to maintain momentum seen in the first quarter, as the nation's economic output rose further in the three months through June. According to the final GDP data, the Euro bloc's fourth largest economy grew 1.0% on quarter in the April-June period, after expanding 0.9% in the beginning of the year. The data marked the eighth straight quarter of continuous economic growth in Spain. When measured on an annual basis, the economy added 3.1%, compared to the first quarter's 2.7% increase. Analysts had expected confirmation of 3.1% GDP growth as estimated by preliminary figures.
Upcoming fundamentals: Greek GDP in focus after Q2 surprising rise
The gross domestic product data from Greece is due at 9:00 GMT today, when the revised second-quarter numbers will be published. Earlier this month, the first estimate showed an unexpected 0.8% GDP gain for the period. However, it did not include the capital controls imposed on country's banks in July. In the meantime, both Euro area's business sentiment index and Spanish CPI are due at 9:00 and 7:00 GMT today, respectively, while German inflation should be announced by 12:00 GMT today.
EUR/USD loses steam, drops below 1.13
Support at 1.1295/62 failed to produce any bullish momentum for long traders on Thursday. As a result, the pair slumped below both of these technical levels to trade around 1.1240 by Friday morning, after testing the Jul high at 1.1216 earlier yesterday. Last month's high also guards the next support zone represented by 20-day SMA and monthly R1 at 1.12. A decline below them should trigger losses down to the main demand at 1.1130/12 (weekly S1; 100 and 200-day SMAs). From another side, any rally will meet a substantial resistance at 1.1409/66 (May/Jun highs).Daily chart
In the one-hour chart EUR/USD managed to confirm the bullish channel pattern, by crossing its lower trend-line. Moreover, probability of further losses increased significantly due to a dip below both 23.6% Fibonacci retracement of 2014-2015 downtrend and 200-hour SMA, currently at 1.1288.
Hourly chart
SWFX sentiment remains bearish, while pending orders are back below 50%
The share of bullish positions at OANDA is 42.40% at the moment, while SAXO Bank market participants are also remaining strongly pessimistic towards the common currency, with their portion of longs taking up only 36% of all open trades on Friday, August 28.
Spreads (avg,pip) / Trading volume / Volatility
Community members expect Euro to continue rallying this week
As volatility in the equity markets remains uplifted, traders are moving away from the Greenback as Fed meeting approaches. As a result, the advantage of bullish votes increased even more over the past five trading days, up from 63% to almost 73%. Market participants also see the pair higher by Friday of this week, with the mean forecast being placed at 1.1450.
A proponent of a near-term growth, RacerX, suggests that "with increasing skepticism about the Federal Reserve raising interest rates in the middle of next month and the unexpected devaluation of the Yuan, the Euro is looking increasingly attractive."