- SWFX market sentiment is 53% bearish
- Pending commands in the 100-pip range 64% short
- Pair opened Thursday's session at the 1.1122 level
- Aggregate daily technical indicators bet EUR/USD will depreciate
- Economic events to watch over the next 24 hours: German Unemployment Rate (June); EU CPI Estimate Yearly (June); ECB Monetary Policy Meeting Accounts; US Initial Jobless Claims (June 25); Chicago PMI (June); Fed's Bullard Speaks
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: Various data releases and ECB meeting accounts
Thursday is a busy day for statisticians, as various data releases are set to happen on this day. First of all the German retail sales for May have already been published at 6:00GMT, and unemployment rate for June is set to follow at 7:55 GMT. Next the EU will publish the common CPI estimate yearly change for June at 9:00 GMT. Later on the ECB Monetary Policy Meeting Accounts will be released at 11:30 GMT. In the second half of the day, the US statisticians are set to wake up and publish information. Initial Jobless Claims for the week of June 25 will be released at 12:30 GMT, and they will be followed by the Chicago PMI for June at 13:45 GMT. The busy day will end with a speech from the Fed voting member Bullard at 18:00 GMT.
EUR/USD passes 1.11 mark on Wednesday
Daily chart: The European common currency surged on Wednesday from 1.1062 to 1.1124 at the end of day's trading against the US Dollar. This surge is a continuation of a recovery from the huge drop, which occurred after the results of the UK's referendum on membership in the European Union were published. However, Thursday morning the currency exchange rate has already dropped to 1.11 by 5:00 GMT. In addition, aggregate daily technical indicators forecast a continuation of Euro's depreciation against the US Dollar.Daily chart
Hourly chart: On the hourly chart it can be seen that the European Currency steadily climbed on Wednesday against the US Dollar, as it experienced only a few hours of decline, which only hindered the pace of surge. However, that changed at midnight between Wednesday and Thursday, as the currency exchange rate has been steadily declining from 1.1126 level to1.1089 by 6:00 GMT. In addition, the chart shows that there are no supports until 1.1070 level, around which 55 and 100-hour SMAs together with the lower Bollinger band are located.
Hourly chart
SWFX traders also bearish on Thursday
OANDA trader bearish sentiment has decreased compared to Wednesday's 59.95%, as, at the moment, 59.45% of OANDA open positions are short. However, SAXO Bank clients have increased their bearish stance, as their open short positions are now at 63.49% compared to 60.21% on Tuesday.