- Bullish majority (52%) is unchanged on a daily basis
- Broad range (100-pip) pending orders are set to sell the Euro in 52% of all cases
- Speeches from ECB's Draghi and Fed's Yellen may produce extra market volatility on Thursday
- Daily technical indicators assume the Euro will lose value in the near term
- Economic events to watch in the next 24 hours: German and French CPI (Oct); Euro zone Industrial Production (Sep); ECB President Draghi Speaks; US Unemployment Claims (Nov 6), Crude Oil Inventories (Nov 6) and Monthly Budget Statement (Oct); FOMC Members Yellen, Lacker, Bullard, Evans, Dudley and Fisher Speak
Those who waited the European Central Bank President to shed some light on the possibility of more monetary easing in the Euro zone, were left disappointed. Analysts and economist were anticipating some major moves in the Euro after Mario Draghi's speech at the Bank of England open forum presentation, as expectations were raised in October when Draghi suggested a major policy move. Instead ECB President took the opportunity to speak about the integration required in European institutions. The key message of Draghi's speech was to urge leaders to implement a banking union across the currency bloc, including a single deposit insurance scheme to protect savers when a bank collapse. However, this topic has been considered as increasingly controversial in Berlin. At the ECB's October meeting, Draghi convincingly signalled the possibility of more quantitative easing, sending the Euro to a two-month low against the US Dollar. Also, Draghi spoke about the possibility of negative deposit rates and more asset purchases. However, it still remains unclear, whether the ECB will extend its current 1 trillion euro asset purchase programme beyond next September, or ramp it higher by increasing the monthly amount it purchases.
Meanwhile, Australia's jobless rate declined as employment surged in October, overshooting economists' expectations by a wide margin. A steep increase in the number of jobs created by the South Pacific economy pushed the unemployment rate below 6.0% for the first time in six months, decreasing chances of further monetary policy easing from the Reserve Bank of Australia. The nation's jobless rate slid to 5.9% in October, down from 6.2% a month earlier, according to the Australian Bureau of Statistics. Economists, in contrast, had predicted the reading to remain unchanged. The total number of people with jobs surged by 58,600 in the reported month, well above the consensus forecast for a 15,000 gain. The number of unemployed people fell by 33,400. Moreover, the participation rate, climbed to 65.0% from 64.9% in September. Yet, the rate remained lower than the 65.1% in July, when it was at the highest level in more than two years.
Upcoming fundamentals: Mario Draghi to testify before EU Parliament
At 8:30 GMT on Thursday the President of the European Central Bank Mario Draghi will begin testifying before the European Parliament's Committee on Economic and Monetary Affairs. He is expected to face questions about monetary policy and especially the possibility of additional QE stimulus as soon as December. Core statistical data releases will include the Euro zone's industrial output for the month of September. The indicator is estimated to continue declining by 0.1% on a monthly basis after a slump of 0.5% in August.
EUR/USD flat; trading volume at six-day low
As the most traded currency pair has been largely unchanged in value so far this week, we see the volume of trading declining as well. Yesterday it dropped to the lowest level in six days. Main resistance is still represented by the monthly S1 at 1.0768, followed by Jul low at 1.0808. Bears are focusing on April low at 1.0519, but movement in that direction should be possible in the medium term only. Among technical indicators, the RSI indicator suggests EUR/USD is not oversold anymore on a daily basis.Daily chart
In the one-hour chart, 200-hour SMA is approaching the spot price by hovering at 1.0851 right now. It will create more bearish pressure by the end of this week when we are going to get data on US retail sales in October, which may provide extra volatility to the markets. Outlook is therefore moderately positive with respect to US Dollar and negative towards the Euro.
Hourly chart
Bulls hold their share at 52%, orders approach 50/50
On the other hand, bullish views are not supported by OANDA clients anymore as the share of the longs slipped from 50.18% to 48.58%. Alongside, SAXO Bank traders are unwilling to go long as well, while bears expanded their advantage to 60% from yesterday's 57%.
Spreads (avg,pip) / Trading volume / Volatility
Vast majority of Community members forecast the Euro to plummet against the US Dollar this week
This week, Dukascopy traders became totally bearish on the European currency's perspectives, as only 12.5% of all votes are set to go long on the EUR/USD currency pair at the moment.
"The price was declining sharply after the NFP release and daily candle closed under the 1.0850 support level. I am expecting a pullback near this area and there is a high possibility of a bearish reversal (the bearish pressure will continue). In my view this pair will be very close to parity at the end of the year" - said trader csan86.