- SWFX market sentiment is 53% bearish
- Pending commands in the 100-pip range 53%long
- Pair dropped to the 1.1250 level on Friday
- Aggregate daily technical indicators bet EUR/USD will appreciate
- Economic events to watch over the next 24 hours: EU Industrial Production (April); US Retail Sales (May); ECB's Mersch Speech; French CPI (May)
For the previous month, Germany's trade balance advanced unexpectedly. According to the Federal Statistics office, Germany recorded a headline of 25.6bn euros for April from 21.8bn euros in April 2015. The seasonally-adjusted surplus increased to 24bn euros from a revised 23.7bn euros in May, compared with an expected decline for the month. Moreover, the adjusted surplus was at a record high and will resume supporting the single European currency. The overall German current account surplus expanded to 93.9 billion euros for the first quarter of 2016 from 79.8 billion euros the previous year despite a slight widening in the services deficit. Meanwhile, analysts had expected Germany's trade balance to plunge to 23bn euros last month. Meanwhile, German exports went up by 3.8% in April compared to the same month a year ago, while imports remained nearly unchanged and as a result have led to a wider trade balance for Europe's most powerful economy. Overall, German exporters have strong global position on competitiveness grounds, which will continue to underpin the trade surplus in the short term. Moreover, the surplus will also make it challenging for the ECB to push the Euro substantially weaker even taking into account the quantitative easing programme.
According to the NAB's latest monthly research, business conditions in Australia remain to be solid in May apart from the mining sector. However, despite companies' robust trading conditions the sentiment has waned, adds the latest NAB business survey. The survey also shows that firms reported slightly lower levels of confidence in May, with that index decreasing by two points to +3.0, further below its long-run average. Meanwhile, the overall conditions index managed to be steady at +10. At this level, the broad conditions index is still well above the long-term average of +5. The following results were in line with recent indicators that confirm a steady economic growth as well as soothe inflationary pressure and will likely not alter the Reserve Bank's plans greatly. Overall these numbers show a muted reaction to the May 3 rate cut from the Reserve Bank, which failed to bring some power in confidence for businesses. Concerning industries recorded an improvement, services sector was top performer, while manufacturing and finance were the two key sectors to see a decline in conditions. In the meantime, mining and construction remained the only sectors reporting below-average conditions.
Upcoming fundamentals: European production and US sales
After yesterday's quiet, the world is releasing some fundamental data on Tuesday. First of all, the European Union's industrial production monthly and year-to-year changes for April are set to be released at 9:00 GMT. Second will be the US retail sales monthly change for May at 12:30 GMT. In addition, ECB's Mersch is set to speak at 4:00 GMT at the 6th European Financial Congress. Moreover, tomorrow morning data from the French is incoming, as the French monthly and yearly CPI data is set to be released for May at 6:45 GMT.
EUR/USD bounces back to 1.128 on Monday
Daily chart: The Euro dropped to 1.1233 on Monday against the US Dollar. However, the currency exchange rate managed to recover and end the day' trading session at 1.1290. On Tuesday morning, the pair has depreciated a little bit to 1.1288, as it struggles fluctuating between the monthly pivot point and 20-day SMA below the rate around at 1.1282 and the weekly PP and 55-day SMA above the pair around at 1.1304. However, aggregate daily technical indicators forecast an appreciation of the European currency against the Greenback.Daily chart
Hourly chart: On the hourly chart, it can be seen that the Euro's previous drop against the US Dollar happened due a bounce off the weekly pivot point at 1.1304. In the meantime, most fluctuations since midday of June 13 happened due to the fact that the currency exchange rate has been bouncing up and down between the 200-hour and 55-hour simple moving averages. The pair is now approaching the monthly pivot point due to the fact, that the SMAs have moved each their own way upward or downwards to support other levels.
Hourly chart
SWFX traders do not change sentiment
OANDA trader bearish sentiment has decreased compared to Monday, as 54.90% of open positions are short. However, SAXO Bank clients have increased their bearish stance, as their open short positions are now at 64.78% compared to 63.41% yesterday.