- Market sentiment remains moderately bullish (53%)
- Share of long pending orders in 100-pip range advanced to 46%
- Bulls to consolidate EUR/USD above 1.1260
- Nearest major resistance zone is placed at 1.1450
- Economic events to watch in the next 24 hours: Spanish Retail Sales (Aug) and Flash CPI (Sep); German Prelim CPI (Sep); US Goods Trade Balance (Aug) and CB Consumer Confidence (Sep)
Beginning of the week in the EU brought us almost empty economic data session, as the only news were coming from Apennine and Iberian peninsulas. According to the Italy's statistical office Istat, confidence in country's manufacturing sector gained significantly in September. The morale gauge climbed to 104.2 from a revised 102.7 points recorded in August, and marked the highest results since May 2011. Meanwhile, markets expected the reading to stay at just 102.7 points. At the same time, the Consumer Confidence Index rose to 112.7 in September from 109.3 in the prior month, registering the highest reading since May 2002. Despite deceleration in the latest Italian PMI measure, which remained firmly in expansion territory, the boost in confidence in manufacturing sector confirmed that Italy's economy is on track to recovery.
Meanwhile, in Spain pro-independence parties emerged with a majority of seats in regional elections in Catalonia, but fell short of their target to capture 50% of the votes. Separatists jointly obtained 47.8% of the vote in a record turnout of 78%, which is a big boost to an independence campaign that has been losing support over the last two years. Nevertheless, Spain's constitution does not allow any region to break away, so the prospect of Catalonia's independence remains highly hypothetical.
Upcoming fundamentals: German, Spanish inflation set to weaken in September
Consumer prices in Germany have probably seen a decrease in September, while the Eurostat's HICP reading is forecasted to fall below zero this month. Both indicators on monthly and yearly basis are due at 12:00 GMT today. Meanwhile, the Conference Board's measured US consumer confidence index is forecasted to dip back below 100 points in September after a surprising spike to 101.5 points last month. These numbers are due at 14:00 GMT.
EUR/USD gets bullish momentum from 200-day SMA
Supported by important 200-day moving average line, the EUR/USD currency pair inched higher on Monday and eroded all initial daily losses. At the moment bulls are testing the 1.1260 resistance, which includes the monthly pivot point and 50% Fibonacci retracement of the Jul-Aug uptrend. Consolidation above this mark will expose the Sep 17-18 highs around 1.1450 in the medium term, while intermediate supply levels are placed at 1.1313 (weekly R1) and 1.1368 (38.2% retracement). Despite that, daily indicators are largely neutral at the moment.Daily chart
EUR/USD surged above the 200-hour SMA on Tuesday morning and therefore increased its chances for a successful rally in the foreseeable future. However, we should see a comfortable consolidation above the line, currently at 1.1235, to refocus the outlook to the upside.
Hourly chart
Share of bulls unchanged at 53%
Meanwhile, bullish open positions at OANDA are broadly flat at 44.22%, while SAXO Bank traders are also remaining largely pessimistic with respect to the common currency as their portion of the longs stays at 32% today.
Spreads (avg,pip) / Trading volume / Volatility
Community members forecast the Euro to grow against the US Dollar this week
On a weekly basis, the sentiment has improved significantly, as almost 63% of participants in our weekly quiz expect the Euro to rebound versus the Greenback.
Among traders, khalidamassi suggests says that "EUR/USD was supported last week around 1.11 as it recovered slightly towards 1.12, so 1.11 will be the minor support this week, which may send the pair towards 1.14 if US employment is not good. But the new surge in US employment or lower unemployment rate should give a boost for USD, especially after Yellen's last speech about raising rates before year-end."