- SWFX market sentiment is 56% bearish
- Pending commands in the 100-pip range are bearish (51%)
- Pair reached 1.1375 level on Wednesday morning
- Aggregate daily technical indicators bet EUR/USD will depreciate
- Economic events to watch over the next 24 hours: ECB's Nouy Speech; US JOLTS Job Openings (April); US 10-Year Note Auction
According to the Eurostat statistics agency, growth in the single currency region advanced from January to March at a greater pace than the previous estimate, thus giving the bloc 1.7% growth on a yearly basis. Meanwhile, economists did not expect some changes in the year-on-year or quarter-on-quarter data. The statistical office of the European Union said that the rise was supported by strong household spending, which rose to 0.6% from 0.3% during the previous quarter, as well as taking into account a stable increase in exports which accelerated by 0.4%.Within the Euro zone, Romania and Cyprus announced the steepest growth at 1.6% and 0.9%, while the Germany's economy expanded by 0.7%. However, Hungary, Greece and Poland economies slowed down, while record decrease was booked for Hungary (-0.8%), Greece (-0.5%) and Poland (-0.1%), respectively. Britain's economy, the largest within the Euro zone, posted quarterly growth of 0.4% and a 2% expansion in GDP on an annual basis, while GDP in Estonia remained stable. Currently, the Euro zone has struggled with feeble growth, is trying to eliminate low inflation and decrease unemployment rate, after emerging from recession three years ago. The more recent problems including renewed concerns over Greece and the potential Britain‘s exit from the EU also puts additional pressure.
German factory orders have declined significantly, as demand for investment goods from outside the Euro zone slumped in April, strengthening worries about stagnation in the German industry. According to the latest release of the Economy Ministry in Berlin, the data dropped 2% from the prior month, when it rose to a revised 2.6%. The reading, which is usually volatile, is incomparable to economists' predictions for a decline of 0.5%. Moreover, orders slid 0.5% from a year earlier. On a yearly period, the index also went down, losing 0.5% against forecast of 0.6% of expansion. Overall, following decrease was provoked by a 4.3% drop in foreign orders, primarily from outside the 19-nations' region, while domestic orders increased by 1.3%. Meanwhile, within foreign demand, new orders from the Euro area surged 2.5% for the previous month, while new orders from other countries slipped 8.3%. Orders for intermediate goods, in turn, added 4.8%, while the manufacturers of capital goods showed a monthly fall of 6.1%. For consumer goods, a decrease in new orders of 1% was registered. In the meantime, the Bundesbank last week cut its forecast for German growth in 2016 and 2017, simultaneously affirming a robust economic trend as well as strengthening labor market conditions.
Upcoming fundamentals: Nouy speech and JOLTS Job Openings
There are few notable fundamental events today. First of all ECB's Nouy will give a speech to the audience of the Goldman Sachs 20th annual European financial conference in Paris, France at 10:30 GMT. Later in the day, in the US JOLTS job openings for April are set to be published at 14:00 GMT. In addition, today is the US treasury 10-Year note auction at which the note's yield to maturity will be revealed. It was 1.71% previously and probably won't be changed.
EUR/USD appreciates steadily on Wednesday
Daily chart: The European currency gained strength against the US Dollar on Tuesday, as it appreciated from 1.1355 to 1.1374. In addition, the movement north of the pair happened steadily without much volatility, favouring the more conservative bulls. At the moment, the currency exchange rate is located between the monthly PP at 1.1282 and monthly R1 at 1.1466. Moreover, the monthly PP and R1 are supported by the weekly PP and R1 respectively at 1.1279 and 1.1463. If the pair continues its movement upward, EUR/USD will also face the upper Bollinger band at 1.1452.Daily chart
Hourly chart: In the meantime, the hourly chart shows that the Euro against the US Dollar keeps bouncing between the upper Bollinger band and various supports below. Yesterday the pair was volatile between the levels of 1.1340 and 1.1380. At the moment, the currency exchange rate is at 1.1366 and is moving south, as it again bounced off of the upper Bollinger band. The European currency is about to face a support cluster of the 20-hour SMA, daily PP and 55-hour SMA around 1.1360. Aggregate technical indicator today forecasts depreciation for the Euro against the Greenback.
Hourly chart
SWFX traders increase bearish sentiment
OANDA market sentiment is also more bearish today, as 58.60% of open positions are short. Alongside, SAXO Bank clients have almost not changed their stance, as their open short positions are now at 66.08% compared to 66.81% yesterday..
Spreads (avg,pip) / Trading volume / Volatility
Average forecast says EUR/USD will trade at 1.12 by August
Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between May 8 and June 8 expect, on average, the currency pair around 1.12 by the end of August. Though 52% (+1%) of participants believe the exchange rate will be generally below 1.12 in ninety days, with 32% alone seeing it below 1.08. Alongside, only 24% (-1%) of those surveyed reckon the price will trade in the range between 1.12 and 1.18 on August 31.Dukascopy Community members are bearish on this week's perspectives of EUR/USD
56.6% of the Dukascopy Community members are expecting a decline in the value of the Euro against the Greenback by the end of this working week. The median estimate for June 10 stands slightly above 1.12. Among traders, Khimitau suggests that "After a 20 days down trend the pair has found support around 1,13 and a strong contra trend move is visible. Thought I am expecting a trend continuation with the pair reaching the EME(20) around 1.128".
At the same time, trader megajorko is bullish stating that ""There is a big probability of a big opening gap due to the absolute surprising NFP. Technicals show that channel down is still intact and only the time can show if this is true".