- Gap between SWFX bears and bulls shrank to ten percent by Monday morning, down from 12% on Friday
- Bullish lead among 100-pip pending orders was short-lived, as they are back below 50% today
- Recent daily candlesticks created by EUR/USD suggest the pair is on the verge of sliding down
- Aggregate daily technical indicators remain mainly undecided on Monday
- Economic events to watch in the next 24 hours: Spanish Industrial Production (Nov); Euro zone Sentix Investor Confidence Index (Jan); US Labour Market Conditions Index (Dec); FOMC Members Lockhart and Kaplan Speak
German industrial output dropped unexpectedly in November, while trade surplus came in below economists' forecasts for the reported month, adding to signs that the Euro zone's powerhouse is struggling to gather momentum following a sluggish third quarter. Total seasonally adjusted industrial production declined 0.3% in November from the previous month, falling short of a median forecast rise of 0.5%. However, the economics ministry expected industrial activity to gather speed over the coming months. Weak demand from developing economies has undermined German industrial activity. Industrial output climbed just 0.1% from November 2014, in calendar-adjusted terms. In a separate report the Federal Statistical Office said that Germany's adjusted trade surplus shrank to 19.7 billion euros in November from 20.6 billion euros in October. A 0.4% monthly increase in exports was outstripped by a 1.6% advance in imports. Meanwhile, industrial output in the Euro zone's second biggest economy also decreased in November. French industrial output fell 0.9% in the reported month, following an upwardly revised 0.7% growth in October. Despite emerging markets slowdown France's government expects the economy to have grown at least 1.0% in 2015.
The UK's trade deficit in goods and services shrank in November as the value of oil imports dropped. The British total trade shortfall came in at 3.2 billion pounds in the reported month, down from 3.5 billion pound trade gap in October, according to the Office for National Statistics. The deficit for the three months to November was 7.7 billion pounds, down 1.0 billion pounds from the previous quarter. In volume terms, exports of goods climbed 0.6% from October. However, that followed a drop of 2.5% in the month before, leaving them up by just 0.6% in terms of quarterly rates of change. Strength in Sterling, particularly versus the Euro, continued to weigh on exports amid sluggish global demand. Imports increased by 2.5% over the same time frame. The Confederation of British Industries that despite exports remaining the weakest spot, manufacturers' export orders had improved in the last month of 2015. The UK's trade balance remains one of the weakest segments of the economy, with foreign trade in goods posting persistent deficits since 1998. Reducing the trade deficit so that the economy is less reliant on domestic demand is part of the government's policy to rebalance the economy.
Upcoming fundamentals: A light start to weekly trading in Europe
Industrial production data from Spain will be out at 8:00 GMT on Monday, with output expected to grow by 3.8% in November on a yearly basis. It will proclaim a decline from 4% in October, even though manufacturing industry continues to be strong amid confident economic recovery in the fourth biggest economy of Europe. In the meantime, the European investor confidence index published by Sentix will be released at 9:30 GMT. The survey fell short of forecasts last month and dipped to 15.7 points, while a score of just 11.5 points is projected in January, a sign that investor sentiment is waning across the Euro region.
EUR/USD risks correcting lower from 1.0930
EUR/USD created a classical long lower shadow candlestick during the session on Friday. It indicates that short traders controlled the pair, but then lost overall control to the bulls who managed to make an impressive comeback. Such a candle followed a strong surge on Thursday, meaning the up-trend seems to be diminishing. The Euro is at risk of tumbling from a December downtrend near 1.0930. The key bearish obstacle is placed above 1.08 (55-day SMA, monthly PP). The bullish success, however, can send the pair as high at 100-day SMA at 1.1024.Daily chart
In the one-hour chart the EUR/USD cross is currently trading within the bearish channel pattern. The price is now hovering around the upper edge of the figure, meaning an upcoming decline is on the table. Alongside, some bullish pressure will be awaited at 1.0854 where the pair is going to meet the 200-hour SMA.
Hourly chart
Most of SWFX market players are still betting on Dollar's climb
In the meantime, OANDA and SAXO Bank clients became somewhat more sceptical with respect to EUR/USD's perspectives. A report on OANDA open positions indicates that almost 59% of their clients are holding bearish trades at the moment. Among SAXO Bank market participants, the portion of the shorts is even higher at 65.4% in the morning on January 11.