- SWFX market sentiment is 52% bearish
- Pending commands in the 100-pip range 66% short
- Pair opened Tuesday's session at the 1.1080 level
- Aggregate daily technical indicators bet EUR/USD will depreciate
- Economic events to watch over the next 24 hours: EU Economic Summit; ECB Lautenschlager Speaks; EU Economic Confidence (June); ECB Constancio Speaks; German CPI (June); US PCE Price Index Core (May); Heads of Central Banks discuss monetary policy in Sintra, Portugal.
The US economy expanded more than previously estimated during the first three months of the year, but not as sharply as previously estimated, moreover, the overall trend remains vulnerable to a new round of global economic turmoil. According to the Commerce Department, gross domestic product, the most important measure of goods and services produced across the US, advanced 1.1% at an annual pace in the first quarter, showing the weakest pace in a year. Also, the agency previously forecasted the economy rose at a 0.8% pace. The following announcement confirms that the economy has regained momentum in the second quarter. Nevertheless, uncertainty following last Thursday's "Brexit" referendum poses a risk to the growth outlook. In the meantime, the US consumers became more confident in the economy in June since the Conference Board release showed the index went up to 98 from 92.4 in May. Moreover, Americans outlook of current economic conditions was the most positive since September. However, despite the following jump in June's readings, consumers are still relatively cautious about economic growth in the short term.
According to the European Central Bank, during the previous month the Euro zone money supply growth rose in May as well as the annual increase in loans to households improved. The broad monetary aggregate M3 jumped 4.9% on a yearly pace, following a 4.6% rise seen in April. Moreover, it was expected to reach 4.8%. Also, it is worth to point out, that both announcements rose on a faster-than-expected rate. The annual growth rate of loans to households came in at 1.6% in May, compared with 1.5% in April. Another data revealed that the yearly advance in credit to general government reached up to 11.1% in May, from 10.3% in April. Furthermore, the expansion of credit to the private sector reached 1.3% compared to the 1.1% in April. However, loans to non-financial corporations went up 1.4% after climbing 1.2% in April. Meanwhile, the ECB has launched a raft of policy measures in order to get credit flowing. In the meantime, the European markets faced another session of heavy losses at the beginning of the current week, being affected the unexpected result of the UK referendum on Thursday and Friday. The possibility that the UK will exit the European Union has left investors on edge. European stock market also was among the weakest performers.
Upcoming fundamentals: EU Economic Summit continues
The EU Parliament is meeting for the second consecutive day to deal with the Brexit issue. In the meantime ECB's Lautenschlager is set to speak at 8:00 GMT at the ECB Forum on Central Banking in Sintra, Portugal. An hour later, at 9:00 GMT the EU Economic Confidence for June is set to be published. A while later, ECB's Constancio will give a speech at the ECB forum at 10:30 GMT. The Germans are set to release the monthly and yearly CPI changes for June at 12:00 GMT. There will be also data published on the other side if the Atlantic Ocean, as US monthly and year-to-year PCE core price indices for May will be out at 12:30 GMT. Last and most important is the discussion panel of the central banks, as the heads meet and talk it out in Sintra at 13:30 GMT.
EUR/USD fluctuates around 1.1065 on Wednesday
Daily chart: The European currency surged from 1.1023 to 1.1062 on Tuesday against the US Dollar, as the Euro is slowly recovering after the huge drop it experienced on the results of the UK referendum on EU membership. At the moment, the currency exchange rate is fluctuating around the level of 1.1065, and it has already experienced volatility between the ranged of 1.1050 to 1.1080 today. The rate is most likely to struggle with the 200-day SMA at 1.1096. In the meantime, aggregate daily technical indicators forecast a depreciation for the EUR/USD pairDaily chart
Hourly chart: On the hourly chart it can be seen that the European Currency, after rising steadily on Tuesday, had some minor decline before it experienced a 30-pip surge around 8:00 GMT against the US Dollar. However, this surge was followed by decline up to the evening, when the currency exchange rate jumped again by around 30 pips. Since then, the pair has been fluctuating around the level of 1.1065, as it is located between the 20-hour SMA and the upper Bollinger band.
Hourly chart
SWFX traders bearish on Tuesday
OANDA trader bearish sentiment has increased compared to Tuesday's 58.12%, as, at the moment, 59.95% of OANDA open positions are short. In addition, SAXO Bank clients have increased their bearish stance, as their open short positions are now at 60.21% compared to 59.71% on Tuesday.