- Bullish market share rose to 55%, the highest in 15 weeks
- Broad range (100-pip) pending orders are set to sell the Euro in 61% of all cases
- Political background may drive EUR/USD on Monday due to lack of fundamental news
- Daily technical indicators are equally split between "neutral" and "sell"
- Economic events to watch in the next 24 hours: Euro zone Final CPI (Oct); ECB President Draghi Speaks; German Bundesbank Monthly Report; US Empire State Manufacturing Index (Nov)
Slowdown in emerging markets, the Volkswagen scandal, as well as a migration crisis derailed the Euro zone's number one economy during the third quarter. After a promising and strong performance in the three months through June, the German economy weakened, with the nation's GDP increasing 0.3% during the third quarter, according to Destatis. Domestic consumption was the main driver of third quarter GDP growth. In annual and non-seasonal adjusted terms, the economy expanded 1.8%, in line with economists' expectations. The European Commission predicts real GDP in Germany to increase by 1.7% in 2015 and 1.9% in 2016 and 2017.
Meanwhile, the French economy, the Euro zone's second biggest, performed better in the third quarter, according to preliminary data. France's economic output rose 0.3%, following a 0.0% growth in the second quarter. The household consumption was also the main driver behind the growth, as it increased 0.3% after stagnating in the preceding three-month period. In Italy, GDP continued to increase at a 0.2% quarterly pace, signalling that the process of implementing economic reforms should continue. On an annual basis, the Euro zone's third biggest economy grew 0.9% in the reported period, compared with the revised 0.6% growth in the previous quarter.
Upcoming fundamentals: Euro area's inflation will remain at zero
Final October inflation data for the Euro zone is first due at 10:00 GMT on Monday. The reading should stay unchanged from the preliminary estimate at zero percent, according to economists surveyed. Core inflation is projected at 1.0%, half a way from the ECB target of below, but close to, 2%. Meanwhile, manufacturing index from the New York state may rise from -11.4 to -5.3 points in November, posting the best result in four months. However, in August-October this indicator used to show much worse than expected readings.
EUR/USD opens lower at 1.073 on Monday
On Friday the Euro resumed sliding down and reached the monthly S1 at 1.0768 by the end of trading, even though the lead of bears was extending as low as 1.0713. On Monday EUR/USD opened lower amid impactful political background in Europe. Nonetheless, we expect a sideways development throughout the whole session in the beginning of this week. Mid-term sentiment has a bearish bias, with short traders targeting the Apr low at 1.0519. In this case, at first the recent low (Nov 10) at 1.0673 should be crossed to confirm those downside intentions.Daily chart
For a second consecutive day the 200-hour SMA succeeded to contain an increase in the Euro's value on Friday. Current spread between this line and the spot price amounts to 65 pips. We expect negative pressure to remain in place for the near term.
Hourly chart
Market sentiment at most bullish level in 15 weeks
Meantime, sentiment among OANDA clients advanced from neutral to slightly bullish (52.82%) in the past 72 hours. At the same time, SAXO Bank traders are still unwilling to go long on EUR/USD, while bears are holding 52% of all positions at the moment, down from 58% on Friday.