EUR/USD was stopped by 23.6% Fibo

Source: Dukascopy Bank SA
  • Share of long pending orders in 100-pip range tumbled from 61% to 53%
  • Long open positions rose further from 46% to 49%
  • Strongest resistance is placed at 1.1409/66, interim supply at 1.1295
  • Short traders to wait for momentum from the closest Fibonacci retracement
  • Economic events to watch in the next 24 hours: Euro zone PPI (Jul); Spanish Unemployment Change (Aug); US ADP Employment Change (Aug), Non-Farm Productivity (Q2), Crude Oil Inventories (Aug 21) and Factory Orders (Jul)

© Dukascopy Bank SA
Australian Dollar took a major hit on Tuesday, by declining more than 2% against the Euro. The Reserve Bank of Australia kept the monetary policy stance unchanged, but Chinese slowdown is pushing forward the idea of further monetary weakening in the nearest future. Moreover, today the Australia's second-quarter GDP data came out considerably worse than expected, meaning that a continuous drop of the Aussie versus the 19-nation currency is now projected. Meanwhile, all commodity-linked currencies including the Aussie, Loonie and Kiwi were down in course of yesterday's trading session, while oil prices erased some of recent gains. Meanwhile, the Yen continued to appreciate and added 0.5% versus the single currency.

The jobless rate in the 19-nation currency bloc declined more than expected in July, reaching the lowest level in more than three years. The Euro zone unemployment stood at 10.9% in the reported month, the first time below 11% since February 2012, and compared with 11.1% registered in June. In the 28-member European Union, the jobless rate was 9.5%, the lowest level since June 2011. There remained a huge disparity between European countries. The lowest jobless rates were in Germany, at 4.7%, followed by the Czech Republic and Malta, both at 5.1%. The highest rate, of 25.0%, was in Greece, followed by Spain at 22.2%. Despite its multi-year low, unemployment in the Euro bloc remains a hurdle, as it still stood well above the 7.5% levels seen before the outburst of the global financial crisis.

Meanwhile, Italy's final 2015 second-quarter GDP data showed that the Euro zone's third biggest economy expanded at a rate of 0.3% on a quarterly basis, keeping the same pace of growth booked in the first three months of this year. On an annual basis, the country's economic output increased 0.7% in the reported period, compared to 0.1% growth booked in the previous quarter. The economic recovery may be attributed to a weakening Euro, lower oil prices and the quantitative easing programme enacted by the European Central Bank.

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Upcoming fundamentals: Euro zone producer prices to continue falling



The change in prices received by the Euro zone's manufacturers of goods is estimated to remain deeply in red in July, when the data is published at 9:00 GMT today. The annual indicator is set to decline by 2.1%, down from a 2.2% drop in June, while on a monthly basis producer prices are likely to show a 0.1% decrease. Meanwhile, economists see the total number of unemployed in Spain to grow by 35,300 in August, after a surprising 74,000 drop in the preceding month. This data is due at 7:00 GMT.


EUR/USD was stopped by 23.6% Fibo

EUR/USD advanced for a third working day in a row on Tuesday, but the cross failed to overcome the nearest resistance at 1.1295 (23.6% Fibo) and close above the 1.13 round level. According to daily technical indicators, additional testing of this mark is possible in the next 24 hours. However, positive US employment data may push the Dollar substantially upwards today. Additional bearish momentum is expected to be present, in case EUR/USD falls below 20-day SMA/yesterday low at 1.1225.

Daily chart
© Dukascopy Bank SA

The one-hour chart shows that a decline of the pair is the most realistic scenario at the moment. While trading below both 200-hour SMA and 23.6% Fibo retracement, it has also bounced back from the upper trend-line of the Aug 28-Sep 1 bullish channel. As a result, we may observe the losses extending down to the 1.12 area in the short term.

Hourly chart
© Dukascopy Bank SA

SWFX sentiment approaches 50%, pending orders are losing bullish momentum

EUR/USD's sentiment among SWFX market participants added three extra percentage points from yesterday, as the share of longs advanced from 46% to 49%. In the meantime, the portion of long pending orders in 100-pip range from the spot price dropped from 61% to 53%, but it still remains in positive territory.

The share of bullish positions at OANDA amounts to 47.55% at the moment, while SAXO Bank market participants are even more pessimistic towards the common currency, with their portion of longs taking up only 36% of all open trades on Wednesday, September 2.













Spreads (avg,pip) / Trading volume / Volatility




Community members expect Euro to resume growing versus the US Dollar this week

© Dukascopy Bank SA

Despite EUR/USD's losses throughout the previous trading week, Dukascopy traders are still bullish with respect to the EUR/USD currency pair, as more than 57% of them see the Euro higher by September 4.


A proponent of a near-term growth, khalidamassi, suggests that "After strong move of EUR/USD last week to 1.17, then falling to 1.12, next week's recovery to 1.15 is very likely as the pair closed above 1.12 for the second week, but clear break below 1.12 will dampen expected bullish view for next week."

Average forecast says EUR/USD will trade at 1.11 by December

Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between Aug 2 and Sep 2 expect, on average, to see the currency pair around 1.11 by the end of December. Though the majority of participants, namely 57% of them, believe the exchange rate will be below 1.12 in ninety days, with 40% alone seeing it below 1.08. Alongside, only 22% of those surveyed reckon the price will trade in the range between 1.12 and 1.18 by the end of December of this year.

© Dukascopy Bank SA

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