- SWFX market sentiment is 53% bearish
- Pending commands in the 50range are bearish (56%)
- Pair is closing in on 200-day SMA and lower trend-line at 1.1094
- Aggregate daily technical indicators bet EUR/USD is going to depreciate
- Economic events to watch over the next 24 hours: French, German and Euro zone Services and Composite PMI (May); US Trade Balance (April), Change in Nonfarm Payrolls (May), Unemployment Rate (May) and Average Hourly Earnings (May), Services PMI (May), Factory Orders (Apr); ISM Non-Manufacturing PMI (May); FOMC Member Brainard Speaks
The European Central Bank revealed no surprises regarding interest rate decision as all three main interest rates left on hold, in line with majority of economists' expectations. The central bank's main interest rate, remains at a record low of 0%, while the deposit rate, in turn, will stay at minus 0.4%, indicating that commercial banks continue to pay to park funds with the central bank overnight. The market posted minimal reaction to the following news and was mostly concentrated on President Draghi's press conference. During the ECB President press conference it was revealed that there is willingness to take further action if inflation doesn't pick up decisively, however the need for patience is necessary as previously announced stimulus measures take effect. Also, it was stressed out that Central bank would start its corporate bond purchase programme on June 8 and would conduct its first operation in its new series of targeted loans on June 22. Meanwhile, despite a recent increase in oil prices, the ECB's economists revealed positive inflation forecast for this year, as well as left their projections for next year and 2018 unchanged, an indication that further stimulus measures may be needed if policy makers are to meet their inflation target of just under 2%.
Australian retail sales rose modestly in April, led by strength in cafes, department stores and clothing. In a report, Australian Bureau of Statistics stated that Australian retail sales rose to a seasonally adjusted 0.2%, as soft consumer demand, a warm autumn and aggressive discounting took their toll after a relatively strong March. The growth rate compares with a 0.4% increase for March, and fell short of economists' forecasts of 0.3% this time. The Australian Bureau of Statistics reported that turnover at cafes, restaurants and takeaway stores led the way with a 1% increase, followed by clothing, footwear and accessories, with 0.5% growth. However the situation with food retailers, such as supermarkets, appeared to be bad, as sales in this segment were down 0.3% for the month. Meanwhile, a separate research showed that Australia's trade balance rose more-than-expected last month. Australia's trade balance increased to a seasonally adjusted -$1.579 billion, against market expectations of a -$2.11 billion print. That is a fall of $392 million, 20%, from the March deficit of -$1.971 billion whose figure was revised up from -$2.163 billion. Moreover, data showed that exports have risen by 1% and imports have declined by 1%. This is good news that backs up the strong GDP data released yesterday, but yet is a trend that needs to pick up pace if it is to counteract the loss of the mining industry all together.
Upcoming fundamentals: Euro zone's services and composite PMI data
Today most of the Euro zone's countries publish their services and composite PMI indices. Among them are services PMI indices for Spain at 7:15 GMT, Italy at 7:45 GMT and in addition there are countries, which will publish both the services and composite indices. Both indices will be published in France at 7:50 GMT and Germany at 7:55 GMT. Afterwards the data will be compiled at 8:00 GMT and the composite and services PMI's will be published for the whole of the currency union. In addition, the exchange rate will be highly likely affected by the US change in nonfarm payrolls in May, trade balance in April and unemployment rate in May, which are set to be released at 12:30 GMT.
EUR/USD suffers losses on ECB press conference
Daily chart: Yesterday the Euro depreciated against the Greenback in accordance to the established broadening rising wedge pattern, in which it has been trading since December 2015. At the moment the pair is at the 1.1155 mark, which is not too far away from the 200-day SMA at 1.1094 and the lower trend-line. It is possible that the currency exchange rate will rebound against these combined supports and move upwards afterwards. Aggregate technical indicators also predict a downwards trend today for the pair.Daily chart
Hourly chart: On Thursday the Euro had a very positive outlook against the US Dollar, as it was steadily gaining strength and climbed up to 1.1220. However, just a couple of hours later the situation changed, as in expectations and amidst the ECB rate announcement and the following ECB's press conference the exchange rate plummeted. At the moment the pair is fluctuating around the level of 1.1155, where a cluster of supports is located. Among them are the three SMA's, the middle Bollinger band and the weekly pivot point at exactly 1.1155.
Hourly chart
SWFX sentiment moves to the bearish side
OANDA market sentiment is almost neutral, with 50.79% of open positions being long. Alongside, SAXO Bank clients have not changed their mind and are still bearish, as their open short positions are still accounting for about 60%.