- Bearish market participants expanded their portion of open positions from 51% to 53%
- 100-pip pending orders improved further, bullish share rose from 54% to 58%
- Last five attempts to close above 50% Fibonacci retracement at 1.1280 were unsuccessful
- Daily technical indicators are giving bearish signals, weekly ones are pointing upwards
- Economic events to watch in the next 24 hours: French Budget Balance (Aug) and Industrial Output (Aug); Italian Industrial Output (Aug); US Import Price Index (Sep); FOMC Members Lockhart and Evans Speak; IMF Meeting in Peru
The Euro zone's biggest economy booked a lower trade surplus in August, as exports plunged by their largest amount since the global financial crisis, in the latest sign that Germany is feeling the headwind from a slowdown in emerging markets. According to the data from the Federal Statistics Office, Germany's foreign trade, one of the components of the country's current account, generated a non-seasonally adjusted surplus of 15.3 billion euros in the reported period, up from the 25 billion euros registered in July. At the same time, country's exports dropped 5.2% month-on month, posting the steepest fall since January 2009. August's decline in exports followed a revised 2.2% growth in July, while economists anticipated a 0.9% decrease in the eighth month of the year. As for the import, it contracted by a monthly 3.1% to 78.2 billion euros in August.
In the meantime, the accounts of the ECB monetary policy meeting, which took place in Frankfurt on 2-3 September, revealed that that downside risks to inflation across the Euroland have intensified over the summer. However, it added that more time is needed to gauge the effect of financial market volatility and slower growth in China. At the same time, the ECB showed its willingness to increase its stimulus programmes, if needed, to address the risks of too low inflation.
Upcoming fundamentals: French and Italian manufacturing data for August
While manufacturing output in France (6:45 GMT) is expected to gain 0.6% in August, the same indicator for Italy (8:00 GMT) is likely to slump by 0.3% during the same time period. However, both French and Italian numbers will reverse a decline and advance in July, respectively. Meanwhile, Atlanta Fed President Dennis Lockhart will discuss US economic outlook today at 13:10 GMT at the University of New York, while Chicago Fed President Charles Evans will deliver a speech on the perspectives of monetary policy in Milwaukee, Wisconsin.
EUR/USD set to probe 1.13 again
The common currency was actively fuelled by support zone at 1.1241/20 on Thursday. It managed to bounce off the monthly pivot point, but gains used to be contained by the 50% Fibonacci retracement of the Jan-Mar 2015 downtrend at 1.1280. Still, an attempt to surge as high as 1.1328 was made, and we expect the bullishness to continue in the nearest future. Resistances to violate include the weekly R1 at 1.1304, and success here can send EUR/USD up to the 1.14 area during the next week. This idea is supported by bullish weekly technical indicators.Daily chart
Bullish outlook for the pair is also affirmed by the one-hour chart. On Wednesday the only attempt of the Euro to violate the 200-hour SMA was immediately rejected. Consolidation above 1.1280 will refocus attention on the 1.13 mark, followed by 1.14 and 61.8% retracement at 1.1474.
Hourly chart
SWFX sentiment worsens, orders improve further
Meanwhile, bullish open positions at OANDA were down from 44% to 43% yesterday. SAXO Bank traders are also remaining largely pessimistic with respect to the common currency as their portion of the longs is unchanged at just 33% today.
Spreads (avg,pip) / Trading volume / Volatility
Community members forecast the Euro to grow against the US Dollar this week
This week the number of bullish and bearish votes is almost equal, however, the bullish outlook obtained the majority (56%) of the votes. Meanwhile, the consensus forecast for this Friday, October 9 stands at 1.125.
At the same time, RacerX retains bearish views with respect to EUR/USD as he suggests that "the pair appear to be in a range between 1.10800 and 1.14600 for the month of September. This will likely continue until there is more news on the Fed's intentions with regards to the expected rate hike. I think that this uncertainty has held investors back preventing the range to be broken, either way. Nonetheless, I think that mid-term trend is still to the downside. Should it break 1.10800 support, I believe the pair might gain further momentum to the downside."