EUR/USD is flat at 1.0930 before NY holidays

Source: Dukascopy Bank SA
  • Sentiment among SWFX traders is 57% short so far this week
  • Expectations diminished as even more pending orders are set to sell EUR vs USD (64% in 100-pip range)
  • Strongest supply and demand are provided by the respective 1.10 and 1.09 areas
  • Daily technical indicators estimate a decline next week; short-term outlook is neutral
  • Economic events to watch in the next 24 hours: US Unemployment Claims (Dec 25); ECB Monetary Policy Meeting Accounts

© Dukascopy Bank SA
The common currency traded mainly in green on Wednesday; however, tumbling volumes of trading led to little changes for any of the components. The best daily performer was Euro/Kiwi, which rallied by half a percentage point. EUR/CAD and EUR/AUD followed with an advance of 0.4% and 0.2%, respectively. The commodity-linked currencies reversed earlier (Tuesday) gains, after disappointing US oil stockpiles report showed that reserves went up last week. Hence, prices declined and dragged NZD, CAD and AUD down as well. In the meantime, EUR/USD was broadly silent in course of the whole trading session (+0.12%), following pessimistic fundamental reports from both sides of the Atlantic. Meanwhile, EUR/CHF was the only currency pair to lose ground yesterday, as the Swiss Franc appreciated by 0.3% in relation to the Euro.

Consumer inflation in Spain, the Euro zone's fourth biggest economy, unexpectedly declined in December, sending another warning signal to the European Central Bank. The annual consumer price index came in at 0.0%, the INE reported, against economists' expectations for a 0.1% gain. In November, the index dropped 0.3%. Measured on a monthly basis, the reading slid 0.3% in December, after a 0.4% increase in the previous month. The EU-wide measure of inflation, or harmonized index of consumer prices, declined 0.1% annually in December, compared to a 0.1% climb predicted by economists. November saw the measure dropping 0.4%. The gauge dipped 0.4% month-on-month in December, exceeding economists' expectations for a 0.2% decline. A separate report, Spain logged a current account surplus of 2,388 million euros in October, up from 1,695 euros million marked a month ago, the Bank of Spain reported. Measured on an annual basis, the total current account balance in Spain showed a surplus of 2,388 million euros in October 2015, compared with 1,241 million euros recorded in the same month a year ago.

US factory orders for long-lasting goods including autos, airplanes and electronics were flat in November, as a strong Dollar and struggling global economy weigh on US manufacturers. The Greenback has gained almost 20% against the currencies of the US main trading partners over the last 18 months. According to the Commerce Department, non-defence capital goods orders excluding aircraft, a closely watched proxy for business spending plans, dropped 0.4% last month. Core capital goods orders climbed by a revised 0.6% in October. They were previously reported to have increased 1.3%. New orders in the category were down 3.6% through the first 11 months of 2015 compared with the same period a year earlier. Durable goods orders have plunged 3.7% year-to-date. Gross domestic product expanded at a 2% seasonally adjusted annual rate in the three months through September, the Commerce Department said earlier in the week, driven by a 9.9% growth rate for fixed non-residential investment in equipment. Overall growth appears fairly steady as 2015 comes to an end. Macroeconomic Advisers expected US GDP to rise at a 1.9% pace in the fourth quarter.

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EUR/USD is flat at 1.0930 before NY holidays

Disappointing fundamental reports from both Europe and US resulted in no change for the EUR/USD currency pair on Wednesday. It kept hovering around the weekly pivot point at 1.0930. Besides this technical level, there is a vital demand area below the spot at 1.09. It is created by 55/20-day SMAs, weekly S1 and monthly R1 support lines, meaning any sell-off will not be an easy task for the Euro. A rally, in turn, can be extended through 1.10 in the mid-term where both the upper Bollinger band and weekly R1 lie.

Daily chart
© Dukascopy Bank SA

In the one-hour, the EUR/USD cross is managing to stay afloat around the 200-hour SMA at 1.0938. In case this demand is violated, the next bearish target will be located at 1.0808 (July low). At the same time, a tranquil trading session is likely to persist throughout next few days, before we finally enter a full trading week on January 4, 2016.

Hourly chart
© Dukascopy Bank SA

Pending commands slide further, while SWFX sentiment is flat

SWFX sentiment with respect to the most traded FX cross is steady for a fourth consecutive day. The bulls are in the minority of 43%, while the bears are holding 57% of all positions at the moment. In the meantime, pending orders to buy/sell to the Euro continued to diminish in the past 24 hours of trading. For now, only 29% and 36% of the commands are set to acquire the Euro in 50 and 100-pip ranges from the spot, respectively. Yesterday the share of long orders was 35% and 43%, accordingly.

Similar to the SWFX market, both OANDA and SAXO Bank sentiments have been steady in course of the last 24 hours of trading. OANDA's bearish share of all transactions accounts for slightly less than 61% today, while SAXO Bank clients are still short on the Euro in around 69% of all cases.












Spreads (avg,pip) / Trading volume / Volatility




This week only a slight majority of Dukascopy Community members see the Euro declining versus the US Dollar by the first day of 2016

© Dukascopy Bank SA

This week the sentiment for the EUR/USD cross is more positive, compared to previous week. Only 52% of Dukascopy Community members are waiting for the Euro to drop further. The average prediction for January 1 is placed at 1.09.


Concerning traders' opinions, Likerty suggests that "Bearish correction towards 1.0770's is still in the process, but a return to 1.0960's may end up with another attack on the highs. It is a major pivot for long and short term developments." However, megajorko thinks that "presently EUR/USD is in a bullish mode. There were two attempts from the bears, but they resulted only in short corrections. Due to the low liquidity, I suppose the pair will be volatile."

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

Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between Nov 31 and Dec 31 expect, on average, to see the currency pair around 1.08 by the end of March 2016. Though the majority of participants, namely 55% (-1%) of them, believe the exchange rate will be generally below this round level in ninety days, with 25% (-3%) alone seeing it below 1.04. Alongside, only 23% (+1%) of those surveyed reckon the price will trade in the range between 1.08 and 1.14 by the end of March.

© Dukascopy Bank SA

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