EUR/USD stays flat after soft US data

Source: Dukascopy Bank SA
  • SWFX bears secure a slight majority (51%) of open positions
  • Bulls may suffer from future losses as they are keeping only 39% of 100-pip pending orders
  • US Durable Goods Orders and Personal Spending in focus on Wednesday
  • Daily technical indicators are pointing moderately to the downside
  • Economic events to watch in the next 24 hours: French Consumer Confidence (Nov); Italian Industrial Sales and Orders (Sep), Retail Sales (Sep); US Durable Goods Orders (Oct), Personal Income (Oct), Personal Spending (Oct), Services PMI (Nov), New Home Sales (Oct) and Crude Oil Inventories (Nov 20)

© Dukascopy Bank SA
Australian and New Zealand dollars rallied against the Euro on Tuesday, following their substantial losses one session before. EUR/AUD and EUR/NZD were down by 0.8% and 0.5%, respectively, on the back of increasing oil prices. EUR/CAD followed with a drop of 0.4%. Therefore, all commodity-linked currencies benefited the most yesterday and used to be the most volatile components. The single currency advanced versus the British Pound and US Dollar in the past 24 hours by 0.3% and 0.1%, accordingly. American currency was depressed by consumer confidence index from the Conference Board, which unexpectedly slipped to 90.4 points in November, down from 99.1 points in the preceding month. On the other hand, losses were limited by more or less positive GDP data as economy expanded by 2.1% in Q3 due to rising inventories. The Sterling was depreciating after comments from the BOE Governor Mark Carney who testified before the UK Parliament's Treasury Committee. The Governor noted that "even with limited and gradual rate increases it still will be a relatively low interest rate environment."

German business morale improved in November, reaching the highest level since summer 2014. Ifo's business climate index rose to 109.0 from 108.2 in October, the strongest reading since June 2014. The current assessment sub-index, which measures the current conditions in the Euro zone's number one economy, climbed to 113.4 points, compared with the previous month's figure of 112.7 and beating market estimates of 112.4 points. The Ifo expectations index, showing firms' projections for the next six months, increased to 104.7, up from 103.9 in October. The unexpectedly strong business climate reading by the Ifo economic institute came after the data showed the German economy slowed in the third quarter, as robust domestic consumption was offset by sluggish exports and slack corporate investment. Germany's third quarter GDP growth eased to 0.3% from 0.4% in the June quarter, according to the Federal Statistics Office. This translated into an annualized growth rate of 1.3%, the weakest rate since the third quarter last year. Private consumption rose 0.6% from the second quarter, while government consumption increased 1.3%. At the same time, exports climbed a modest 0.2%, whereas imports jumped 1.1%.

Testifying before a treasury select committee, Bank of England Governor Mark Carney reiterated that the current, record-low interest rates in Britain are likely to continue "for some time", explicitly signalling that the central bank is in no hurry to raise rates. UK interest rates have remained at 0.5% since March 2009. Given the current weak pace of growth and persistently low inflation, most economists do not expect the BoE to hike rates until at least the second quarter of 2016. British consumer prices dropped by 0.1% in October, and are expected to stay close to zero for a few more months.

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Upcoming fundamentals: Italy's retail sales to continue growing in September



Statistical authorities of Italy are due to release the retail sales, industrial orders and industrial sales data for September on Wednesday. Industrial orders and sales are first up at 9:00 GMT. However, markets are predominantly focusing on pan-Italian retail sales (10:00 GMT), which have probably advanced by 0.5% in September after a rise of 0.3% a month before. In the meantime, there are plenty of US fundamentals that are ready to be published today. They include orders for durable goods, wages and consumer spending for October. It will be followed by services PMI for November, home sales numbers for October and US oil stockpiles for the week ended Nov 20.


EUR/USD in limbo between weekly PP and S1

Ignoring fundamentals from both Euro area and US, the most traded FX cross decided to have some rest for one more day on Tuesday. Even despite relatively high trading volume, EUR/USD's movements are muted and we observe little changes around 1.0650. Nearest supply and demand is created by 1.0674 (weekly PP) and 1.0586 (weekly S1). Closure below the support line will expose the April low at 1.0519, which remains the mid-term target for the bears.

Daily chart
© Dukascopy Bank SA

In the one-hour chart the state of affairs becomes more complicated every single hour. EUR/USD is determined to approach the bearish pattern's upper edge at 1.0710, but strong downward pressure will be shortly built by 200-hour SMA at 1.0681. We think that a U-turn is possible, especially in case US statistics encourages EUR/USD's sell-off on Wednesday.

Hourly chart
© Dukascopy Bank SA

SWFX sentiment shows no signals of either bullish or bearish lead

Bears of the SWFX market have gained a minimal majority of open positions in the past 24 hours, namely 51% of them. However, it is not enough to state that there exists any confident trend from either bullish or bearish side. Therefore, it is worth looking at pending orders in both 50 and 100-pip ranges, in order to project the future sentiment among SWFX market participants. The commands continue signalling that the Euro is going to depreciate against the US Dollar. Separately, only 39% (35% yesterday) of them are set to acquire the 19-nation currency in 100-pip range from the spot price at the moment of writing.

Expectations among OANDA and SAXO Bank traders remain mixed on Wednesday. OANDA clients believe the common currency has some growth potential as bulls are holding 52.06% of all open positions. In the meantime, almost 57% of SAXO Bank clients are short with respect to EUR/USD, up from 55% yesterday.










Spreads (avg,pip) / Trading volume / Volatility




Dukascopy Community members forecast the Euro to depreciate against the US Dollar this week

© Dukascopy Bank SA

This week sentiment among traded who participated in the quiz deteriorated further, as only 35% of them expect the Euro to rebound in the period from Nov 23-27.


As Jignesh suggests, "Last week reaffirmed the markets that the ECB will continue further stimulus, if required, and the FED is ready for a lift off. It once again strengthens the point of divergence between the monetary policies of both economies."

Average forecast says EUR/USD will trade at 1.08 by February

Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between Oct 25 and Nov 25 expect, on average, to see the currency pair around 1.08 by the end of February 2016. Though the majority of participants, namely 56% of them, believe the exchange rate will be generally below this mark in ninety days, with 34% alone seeing it below 1.04. Alongside, only 22% of those surveyed reckon the price will trade in the range between 1.08 and 1.14 by the end of February.

© Dukascopy Bank SA

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