- Today only 52% of all SWFX market positions are short
- Pending commands are positive on the observed currency pair (57-59%)
- 20-day SMA offers the nearest daily support at 1.1372, as nearby resistance rests as high as 1.1468/75
- Daily technical studies are mixed
- Economic events to watch over the next 24 hours: US Monthly Budget Statement (Apr) and Crude Oil Inventories (May 6)
A bulk of data releases on the European economy provided mixed diagnoses for largest economic trend setters over the continent for March and April. While German industrial output dropped 1.3% in March, falling short of investor expectations, data on the trade balance showed a positive trend, jumping as high as 26 billion euros, compared to a 20.6 billion euro investor estimate, and ultimately sent mixed signals about German economic health. Destatis reported that exports increased 1.9% in March from a month earlier, while imports dropped 2.3%. Moreover, according to the Bundesbank, Germany's current account increased to 3.04 billion euros, up from 21.1 billion a month earlier. France displayed weaker economic performance over the third month of the year, as industries followed a pattern similar to Germany's, disappointing investors with a 0.3% decline in output, while an advance in government deficit added to the aggravation. On an annual basis, industrial output in France fell 0.8% in March, down from 0.4% posted in February. According to the European Commission's Spring Economic Forecast, France's economic growth outlook was left unchanged, with the EC forecasting it will grow 1.3% and 1.7% in 2016 and 2017, respectively. Last year the French economy expanded by 1.2%.
The Reserve Bank of New Zealand said the risks to New Zealand's financial system have intensified in the past six months. Its latest Financial Stability Report marked slowing global growth, low dairy prices and rising house prices as risks. RBNZ Governor Graeme Wheeler says the outlook for the global economy has "deteriorated" in recent months. Lower interest rates and low oil prices have not been enough to counter a slowdown in the economies of a number of New Zealand's trading partners. The RBNZ held off from broadening measures to cool New Zealand's housing market or help the embattled dairy sector, even though the RBNZ was concerned that house prices were now starting to rise "strongly" in a number of regions across the country. The RBNZ has little control over increasing housing supply, yet the central bank has boosted fresh demand for housing by cutting interest rates to record low levels in an attempt to support consumer-price inflation. In March the Official Cash Rate was trimmed 25 basis points to 2.25%, and most economists agree that the weak inflation outlook means further easing is on the cards. Some economists predict that the OCR will be lowered to as low as 1.75% in the foreseeable future.
Upcoming fundamentals: US public finances to show broad surplus in April
Another European market session will proceed without any fundamental data releases; however, somewhat similar can be said about the US market trading on Wednesday. The US monthly budget statement is due at 18:00 GMT. Public finances in the world's largest economy are highly likely to show a surplus of $116 billion in April, after a $108 billion deficit in the preceding month. This is a seasonal and therefore quite volatile indicator, which can reveal major swings each month amid different timing of several types of tax receipts and government spending.
EUR/USD flirts with 20-day SMA
EUR/USD ended the sixth consecutive trading session with a moderate loss, but the spot is still being provided with bullish momentum coming from the 20-day SMA and March-April uptrend at 1.1372. A recovery is beginning to appear is a more favourable scenario, as another support is guarding the cross at 1.1346 (monthly pivot), followed by the weekly S1 at 1.1319. We would allow for a rally up to the weekly pivot and monthly R1 at 1.1468/75 in the medium-term; however, on a daily basis EUR/USD is likely to be range bound amid lack of fundamental boosters.Daily chart
The 1H chart's case does not assume the EUR/USD currency pair will be a subject to major gains in the nearest future. It is expected to be pressed down by a still upward-developing 200-hour SMA, currently at 1.1441. As soon as the moving average turns down, the likelihood of the continuous sell-off should rise even more. Key target bearish area is placed somewhat above 1.12, particularly at the April low of 1.1215.
Hourly chart
Pending orders are anticipating more gains for the Euro
General sentiment of both OANDA and SAXO Bank marketplaces is remaining largely bearish with respect to the researched currency pair. However, we are still able to observe some improvement in the bullish sector. OANDA clients are less than 60% negative today (62% yesterday), as 66% of SAXO Bank positions are short.
Spreads (avg,pip) / Trading volume / Volatility
Dukascopy Community members are bearish on this week's perspectives of EUR/USD
Almost eight out of ten Dukascopy traders are suggesting the common European currency will diminish against the US Dollar this week, as they have provided a forecast to sell this currency pair. The vast part of price expectations is placed in the range between 1.12 and 1.15; however, some extremely positive estimates from some Community members naturally pushed the average projection for May 13 as high as 1.18.
Among traders, pisakjanos assumes the pair will see no trend over the period. He says that "taking into account Technical Analysis, mainly 4H chart, I am expecting a neutral development." Meantime, Jignesh has provided a clear bearish explanation of the case, as he foresees EUR/USD lower: "The weekly candle on the instrument is showing a strong bearish signal. The US Dollar index, at the same time, is sitting against some significant support, marking the lows of 2015. I am expecting further bullishness in the USD this week, though the long-term bullish trend of EUR/USD is yet to confirm a long term reversal."