- Six out of ten SWFX traders are short on EUR vs USD
- Slightly more than 50% of pending orders are set in favour of the Euro today
- More hawkish than expected FOMC minutes to expose 1.1326 (weekly PP); dovish surprise to energize EUR/USD for gains up to 1.15
- Daily technical indicators are generally bullish on April 6
- Economic events to watch over the next 24 hours: German Industrial Production (Feb); US Unemployment Claims (Apr 2) and Crude Oil Inventories (Apr 1); FOMC Members Mester, Kaplan and Bullard Speak; FOMC Meeting Minutes
The private sector in the Euro bloc expanded less than expected in March, while retail sales surprised to the upside, rising for the fourth consecutive months in February. The Euro zone's Markit composite PMI, which tracks both the manufacturing and services sectors, climbed to 53.1, up from 53.0 in February. Services PMI increased to 53.1 in March, up from 53.3 recorded previously, while manufacturing PMI edged up to 51.6 in the reported month. At the same time, retail sales in the Euro zone increased 0.2% in February on a monthly basis, following the 0.4% gain in January. On an annual basis, retail sales advanced 2.4% during the reported month, after an 2.0% rise in the previous month, and versus the forecast of a 1.9% pick up. The Euro zone's economic performance continued to be fragile as the currency bloc's GDP grew 0.3% in the final three months of 2015, the same pace as in the July to September period. For all of 2015, GDP in the Euro area was up by 1.6% year-on-year. A separate report showed, German factory orders declined significantly in February. Measured on a monthly basis, factory orders decreased 1.2%, following January's 0.1% drop. On an annual basis, the gauge increased by 0.5%, missing expectations of 2.2% growth, while the previous month's 1.1% increase was also revised down to 0.4%.
The US trade balance ballooned in February to the highest level un six months as a surge in imports exceeded a slight pickup in overseas shipments. The trade shortfall widened 2.6% to $47.1 billion from a revised $45.9 billion in January, the Commerce Department said. In February, exports of goods climbed 1.6% to $118.6 billion, while overall exports of goods and services rose 1.0% to $178.1 billion. The increase in exports was the first in five months and reflects the struggle manufacturers face due to a strong US Dollar, which makes US-made goods less competitive in a weaker global marketplace. At the same time, imports climbed 1.3% to $225.1 billion, recording the biggest monthly increase in a year. The report joined data on consumer and business spending in suggesting that the US economic growth slowed further in the first quarter after moderating to a 1.4% annualized rate in the final three months of 2015. Growth estimates for the first quarter are currently below a 1% pace. A separate report showed US services sector reported a higher economic activity in March. An index of non-manufacturing activity increased to 54.5 in March from 53.4 the preceding month, the Institute for Supply Management reported. Non-manufacturing industries account for more than 80% of the US economy. The sector has grown for six years, though its expansion cooled earlier this winter.
Upcoming fundamentals: FOMC minutes in focus
Report on the March meeting of the Federal Reserve will be due at 18:00 GMT on Wednesday. Chair Janet Yellen has set a quite dovish tone during her speech last week, and minutes today are expected to confirm concerns of the FOMC committee on the matter of global economic instability and risks that it poses. Minutes should more or less clarify the outlook for future path of interest rate hikes, after the Fed's dot plot had showed there will be only two moves up in 2016. Before the release, Cleveland Fed President Loretta Mester is expected to speak about economy and monetary policy at the Cleveland Association for Business Economics at 16:20 GMT. These events are due to cause an uplifted volatility of the FX market today.
EUR/USD treads water as FOMC minutes near
Yesterday the bears tried to take leadership over the EUR/USD currency pair, but all losses were ultimately eroded by revived bullish strength. Therefore, the cross keeps hovering around the February high at 1.1370, while getting ready for the release of FOMC meeting minutes later on Wednesday. A more hawkish surprise here will likely provoke a downshift in prices to the weekly pivot point at 1.1326, which is acting as the first immediate support line. However, aggregate daily technical studies are bullish and we are still not ruling out a spike towards the 1.15 area (Oct high; weekly R1).Daily chart
The 200-hour moving average line is prolonging its winning streak, meaning it is inching closer and closer to the spot price. Now there is only a 70-pip gap between them. Today's economic calendar creates both bullish and bearish risks. In case there is a decline below 1.13 later in the day, namely below the SMA, then we should refocus our attention to much lower levels in the 1.11 zone. On the bullish side, we are still watching the Sep/Oct peaks at 1.1459/95, which have remained completely intact so far.
Hourly chart
Bullish side of pending orders recovered above 50%
Bearish SAXO Bank market share climbed even higher over Tuesday to reach 72.62%, up from 71.50% we had observed earlier in our previous review. Alongside, 68.57% of all OANDA traders are now short with respect to the common currency of the Euro zone.