- There are 42% of bullish positions opened in the SWFX market today
- More than 50% of all pending orders are set to buy the pair today
- Any losses of the Euro are expected to be contained by 1.12, while rallies should find a limit at 1.1460
- Fresh daily and weekly technical indicators diverge from each other
- Economic events to watch over the next 24 hours: French, German and Euro zone Flash Manufacturing and Services PMI (Apr); Italian Retail Sales (Feb); Eurogroup and ECOFIN Meetings
The European Central Bank held its interest rates at record lows and kept the size of its bond-purchasing programme unchanged, allowing some time for fresh stimulus measures announced last month to affect the economy. The 25-member Governing Council maintained the benchmark rate at zero, the deposit rate at minus 0.4% and asset purchases at 80 billion euros month. ECB President Mario Draghi reiterated that there were still challenges ahead and there is a need to ensure that low inflation does not become entrenched, as the risks to the recovery remained "tilted to the downside". Thus, the monetary policy in the bloc will stay loose, if not looser, in the future. Also, Draghi particularly highlighted emerging market slowdown, subdued public investment and a lack of structural reforms. Additionally, Draghi robustly defended its cheap money policy against brutal a debate that has driven a wedge between the central bank and Germany, the Euro zone's biggest economy. Criticism by politicians in Germany has intensified amid fears that the ECB could even start to hand out 'helicopter money' to citizens. Germans have a right to question the ECB's actions, but the ECB's independence should not be breached, Chancellor Angela Merkel said
Britain's retail sales recorded their biggest monthly decrease in more than two years in March as Britons cut back on food and clothes in the latest sign households are nervous about the economic outlook. The Office for National Statistics said that the UK retail sales fell 1.3% in March compared with February, a much larger fall than expected. The volume of sales excluding auto fuel dropped 1.6% from February, the most since January 2014. The retail sales data is the latest in a series of disappointing data, coming after weak industrial production numbers and the first increase in unemployment in almost a year. Retail sales figures suggest that consumer spending, the driver of recent economic growth, weakened in March amid weak pay growth and a gloomier economic outlook. The ONS also revealed that public-sector borrowing overshot official forecasts in the latest fiscal year and the national debt burden increased. A 4.8 billion-pound budget deficit in March left the full-year shortfall at 74 billion pounds, or 3.9% of gross domestic product. That compares with the 72.2 billion pounds projected by the Office for Budget Responsibility last month. The overshoot means George Osborne will have to find fresh savings in government spending, raise taxes or hope for quicker economic growth to reach his goal of balancing the government books by 2020.
Upcoming fundamentals: PMI data for Euro zone
French PMI data is first up on Friday at 7:00 GMT. Services sector in the Euro zone's second largest economy has probably seen stagnation in activity trend in April, with the reading of exactly 50 points. Manufacturing industry will also near closer to neutrality. Germany's data (7:30 GMT) is estimated above 50 points for all indicators of both manufacturing and services, as the same applies for the Euro zone's figures due at 8:00 GMT.
EUR/USD is range bound after ECB
Although in the beginning of Mario Draghi's conference the pair was moving as high as 1.14, by the end of the session the bears managed to take control over the market and sent EUR/USD even into the red territory. Trading closed at 1.1287 with just a nine-pip daily loss. It seems that undecided trading conditions are here to stay. Within the current rising wedge pattern the bearish scenario is more favourable, as daily technical indicators are also forecasting a slippage. However, we see the 1.12 area being capable of capping bearish ambitions.Daily chart
The one-hour chart is reflecting the scope of action that has been in place on Thursday. The 1.14 mark acted as a very noticeable resistance for the bulls yesterday, which resent the currency pair back under the 200-hour SMA. We see intraday selloffs as possible down to the 1.1233 zone where EUR/USD is going to meet the April 14 low. However, to neglect the negative outlook the pair must close beyond the long-term moving average for two consecutive days.
Hourly chart
Pending orders for buying Euro soared yesterday
Less than 38% of all OANDA market players are betting the Euro is going to appreciate at the expense of the Dollar, which leaves the bearish side with an overall confident majority of more than 62%. Alongside, SAXO Bank clients are unwilling to switch the sides. On Friday morning they have been almost 70% negative with respect to the 19-nation currency.
Spreads (avg,pip) / Trading volume / Volatility
Dukascopy Community members are quite divided on this week's perspectives of the pair
This week sentiment deteriorated further, as only 45% of participants in our quiz expect the Euro to rebound. Jignesh says "Three times a charm for Draghi & the ECB. Though the EUR/USD remains in a bullish trend, this week the ECB will hold a press conference. In the past two meetings, Draghi's words had the pair move higher after the fact, likely an unintended reaction. With the Euro nearing highs, Draghi will once again bring out his best jawboning skills to the table to try and talk the pair lower."
In the meantime, there are traders who suggest there is room for gains of the cross. For instance, PisakJanos thinks that "as the support at 1.124 level has been reached, I am expecting a recovery of the pair, sustained by the policy of the FED."