- There is a negative gap of ten percentage points between bulls and bears in SWFX market
- More than 50% of all pending orders are set to buy the Euro for the first time in six days
- Support cluster around 1.11 seems to be quite tough for the time being
- Daily technical studies are still overwhelmingly positive on EUR/USD
- Economic events to watch over the next 24 hours: French and Swedish CPI (Jan); Euro zone Current Account (Dec); ECB Monetary Policy Meeting Accounts; US Unemployment Claims (Feb 13), Philadelphia Fed Manufacturing Index (Feb) and Crude Oil Inventories (Feb 12); FOMC Member Williams Speaks
The UK unemployment rate failed to decline as economists had expected and remained unchanged at a decade low in the final quarter of 2015, despite the number of people applying for unemployment benefits plunged to the lowest level in 40 years. The jobless rate remained at 5.1% between October and December, with unemployment falling by 60,000 to 1.69 million people in the reported month. More than 31.4 million people are in work, the highest figure since records began in 1971. Wages excluding bonuses increased above predictions and hit 2%, while pay excluding bonuses failed to climb as high as expected, only reaching 1.9%, the lowest level since February last year. Meanwhile, Britain's inflation climbed to the highest level in a year in January as an increase in alcohol and clothing prices pushed up the cost of living. The annual consumer price index rose to 0.3% in January, up from 0.2% in the prior month, according to the Office for National Statistics. Alcohol and tobacco were the main contributors to the increase as they jumped 1.3% compared with January 2015. The ONS reported that inflation also rose as fuel and food prices declined less than they did a year ago. Core inflation, which strips out volatile components such as energy and food, slowed to 1.2%. Inflation is predicted to edge up slowly this year, as the impact of global oil plunge drops out of the headline rate.
Australia's labour market softened in the beginning of the year, since the unemployment rate unexpectedly jumped in January as full-time employment declined the most since 2013. The jobless rate rose to 6.0% last month, up from 5.8% in December, according the Australian Bureau of Statistics, after employment plunged by a net 7,900 in January. Economists, however, had expected job growth of around 13,000 in the reported month and the unemployment rate to remain unchanged at 5.8%. The ABS added that the number of full-time employed dropped 40,600, offsetting a 32,700 increase in part-time employment. Australia, the most China-dependent economy in the developed world, is struggling with fallout from plummeting prices for its key commodity exports and waning resource investment. Strong job growth was one the reasons why the Reserve Bank of Australia has decided to maintain interest rates on hold since May. A year ago most economists were predicting the jobless rate to increase towards 7.0% as the mining investment downturn intensified. Currently market participants are pricing in a 50% chance the RBA will slash interest rates in May.
Upcoming fundamentals: ECB to publish minutes from its latest policy meeting
Monetary Policy Accounts from the European Central Bank include a detailed transcript of the most recent meeting of the Governing Council that took place on January 21. They are out at 12:30 GMT on Thursday and are will be closely monitored by economists. The ECB is highly likely to confirm that it is ready to add to policy accommodation next time when it meets on March 10. Precise comments about actions that can be undertaken, however, are usually not discussed in the minutes. In the meantime, today French and Swedish inflation data is due at 7:45 GMT and 8:30 GMT, respectively. Both countries are set to register a sharp drop in a monthly CPI reading, even though annual consumer prices have possibly added 0.2% in France and 0.5% in Sweden in January. A Nordic country's inflation is estimated to rise by five times, compared to December's 0.1%.
EUR/USD continues eyeing 1.1115/00
In general the pair is hovering on the downside, while closely monitoring the nearest support zone at 1.1115/00 represented by the monthly R2, weekly S1 and 20-day SMA. Alongside, these levels are all strengthened by the September low and 200-day SMA at 1.1087/51. Such a state of affairs may cause a short-term revival in the direction of the 1.1238/46 area, also given that daily indicators maintain the confident bullish outlook. Beyond today, however, we see EUR/USD struggling to cope with selling pressure.Daily chart
We are pessimistic on the Euro, judging from the development in the hourly chart. EUR/USD consolidated under the key 200-hour SMA, currently 1.1214. The main support remains the zone near 1.11, where the September low merges with the downward trend-line connecting Feb 10/15/17 lows. Below here would allow for more losses to 1.0808 (July low).
Hourly chart
Orders become positive as sentiment stays flat
Meanwhile, OANDA sentiment continues to grow with respect to the Euro and the bearish market share, though still in the majority, tightened to 56.75% over the previous trading session. From the other side of the coin, SAXO Bank market participants have curbed their trust in the currency bloc's currency and pushed the bearish portion above 65%.
Spreads (avg,pip) / Trading volume / Volatility
Dukascopy Community members are bullish on the Euro in more than 64% of all cases
Even though around three our of four Dukascopy Community members had expected the Euro to grow at the expense of the Dollar last week, during a new five-day period the bets on Euro's climb fell down to 64%. Nonetheless, it seems to remain as a clear bullish signal from the traders. The average weekly estimate for Friday, February 19, is 1.13. However, the range of expectations is largely broad and more than a half of all projections is placed with the wide range of 1.11-1.14.
As for some specific forecasts among traders, westline suggests that "EUR/USD has been trading on a bullish trend line for the past two weeks and the H4 chart is showing possible further uptrend." However, Likerty is bearish on the researched cross. He says that "EUR/USD with all the majors are in a corrective mode (USD Strength), which has a chance to fade all the gains made during the previous two weeks."