EUR/USD returns back above 1.12

Source: Dukascopy Bank SA
  • Share of long pending orders in 100-pip range rose from 35% to 49%
  • Market sentiment is now bearish (53%)
  • Key resistance lies at 1.1295 (23.6% Fibo, weekly R1, recent highs)
  • Bears to push the price below several SMAs around 1.11
  • Economic events to watch in the next 24 hours: Greek Unemployment Rate (Jun); US Unemployment Claims (Sep 4), Import Price Index (Aug) and Crude Oil Inventories (Sep 4)

© Dukascopy Bank SA
The shared European currency traded upwards against all but one major currency yesterday, while falling only versus the Swiss Franc by 0.2%. In the meantime, EUR/NZD skyrocketed by 1.9% after the decision of the Reserve Bank of New Zealand to cut the key interest rate by 25 basis points to 2.75%. Moreover, the RBNZ indicated that a further weakening is possible this year. Other commodity-linked currencies including AUD and CAD followed with a drop of 1.2% and 0.7% against the Euro, respectively. However, development of the Aussie did not include positive Australian labour market statistics published in the early morning on Thursday, as well as rising inflation in China.

The Euro zone economy grew a revised 0.4% in the second quarter, while preliminary data showed a slowdown to just 0.3%. The Eurostat also raised its estimate for growth in the first three months of the year, increasing it to 0.5% from 0.4%. Compared with the same quarter of the previous year, seasonally adjusted GDP rose by 1.5% in the Euro area and by 1.9% in the whole European Union. A revival in exports in the Euroland was among the crucial factors, which helped to support growth in the second quarter. Exports increased by 1.6% in the June quarter, mainly due to the Euro depreciation, which allowed the Euro zone exporters to grab a larger share of world demand. However, domestic demand slowed during the second quarter, with household consumption easing and investment spending falling by 0.5% compared with the first three months of the year.

In the meantime, the report from the Euro area's largest economy also showed quite positive results, as Germany booked a higher trade surplus in July compared with the previous month. According to the latest reading, Germany's foreign trade generated a non-seasonally adjusted surplus of €25.0 billion in the reported period, up from the €24.1 billion registered in the prior month. Moreover, exports rose 2.4% following a 1.1% decline in June, and imports advanced 2.2% compared with a negative 0.8% a month ago.

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Upcoming fundamentals: US oil stockpiles to increase for the week ended Sep 4



Analysts see the US oil inventories (15:00 GMT) to advance further as the average forecast suggests they added 0.9 million barrels during the previous working week. Following a 4.7 million barrels' surge in the preceding weekly period, oil prices may receive another downward impetus this evening. Meanwhile, economists are waiting for the Greek unemployment data for June to be released today at 9:00 GMT. Labour market developments of this period, however, still preceded the capital controls and bank closures that took place in July.


EUR/USD returns back above 1.12

Bears dominated during the trading session on Wednesday; however, bulls managed to regain enough strength to push EUR/USD's price back above the weekly pivot point, 20-day SMA and the 1.12 mark. As a result, a classical long lower shadow candle was created by this cross. Meanwhile, 55-day SMA has just crossed the 200-day moving average, signalling of the pair's bullish intentions. Thus, we see EUR/USD higher in the near-term, but rallies should be capped by 1.1262 and 1.1295. Bears in turn are looking at the 100-day SMA some 10-13 pips above 1.11.

Daily chart
© Dukascopy Bank SA

In the one-hour chart EUR/USD has been moving upwards since September 3. Moreover, yesterday the common European currency violated the 200-hour SMA, currently located at 1.1198. It gives the pair an opportunity to extend gains in the next 24 hours.

Hourly chart
© Dukascopy Bank SA

SWFX sentiment turns bearish for the first time in six days

EUR/USD's sentiment among SWFX market deteriorated yesterday, as now the majority of open positions are held by bears (53%). On the other hand, the portion of long pending orders in 100-pip range from the spot price recovered 14 percentage points in the past 24 hours, to grow from 35% to 49%.

Meanwhile, the share of bullish positions at OANDA amounts to 43.43% at the moment, while SAXO Bank market participants are even more pessimistic with respect to the common currency, as their portion of the longs takes up only 38% of all open trades in the morning on Thursday.













Spreads (avg,pip) / Trading volume / Volatility




Community members have a broadly neutral outlook on the pair this week

© Dukascopy Bank SA

The participants of our weekly Community Forecasts quiz decided to become more bearish on the Euro, as 53% of all votes are negative. At the same time, the average closing price for Friday of this week is located above 1.12.


Among traders, Jignesh claims that the Euro received a bearish push lower after the Mario Draghi's speech. He expects rallies to be sold throughout the week. khalidamassi also predicts bearish movement by saying that "EUR/USD failed last week to hold above 1.12, now this level will play a resistance role, as the pair holds below it and may reach 1.085-1.09."

Average forecast says EUR/USD will trade at 1.12 by December

Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between Aug 10 and Sep 10 expect, on average, to see the currency pair around 1.12 by the end of December. Though the majority of participants, namely 54% of them, believe the exchange rate will be below this mark in ninety days, with 33% 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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