- 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
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.
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
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
Pending commands slide further, while SWFX sentiment is flat
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
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."