- SWFX market sentiment is neutral
- Pending commands in the 100-pip range 65% short
- Pair opened Wednesday's session at the 1.1020 levell
- Aggregate daily technical indicators bet EUR/USD will depreciate
- Economic events to watch over the next 24 hours: Euro Area Investment Fund Statistics; EU Monthly Indicators on Government Debt Securities; EU Current Account (May)
US housing starts and building permits rose in June, a sign that the country's housing market remained on solid footing at the end of the second quarter. Housing starts rebounded 4.8% on a monthly and seasonally adjusted basis to 1.189 million in June, sharply up compared with the market's expectation of a rise to 1.1150 million. Moreover, the US Census Bureau reported that contractors took out an additional 1.5% permits for construction of new dwellings in June, totaling 1.1153 million permits in the final month of Q2 2016. Analysts had expected an advance in the indicator to 1.165 million permits in the reported month. Housing starts are seen as an important pillar of the US economy. They not only reflect demand for housing, but also are an important catalyst for the construction sector. Moreover, residential construction added around 0.6 percentage points to first quarter gross domestic product. That was the biggest contribution in over six years. Meanwhile, building permits, a gauge of residential building intentions rose 4.8% to a seasonally adjusted annual pace of 1.189 million units. Permits had declined in two of the past three months. In addition, earlier this week, the latest data revealed that builder sentiment in the US ticked down in July, but pointed to ongoing housing growth.
Inflation in the UK rose during the 'Brexit month' year-on-year, while the core CPI reading showed a fresh climb. The cost of living in the UK rose 0.2% over the month in June while rising 0.5% in the final month of Q2, the report from ONS showed, while markets had penciled in a 0.3% rise of the indicator in the reported month. Meanwhile, excluding volatile food and energy prices, the so-called core inflation reading revealed an improved reading, rising 1.4% in June. The main drivers of the monthly move were transport and recreation, which both contributed 0.1 percentage points to the 0.15% overall change. Air fares were up 10.3% between May and June 2016, compared to 0.3% last June. The core CPI has been hovering around this level since the beginning of the year, highlighting that the country's inflation probably needs additional stimulus in order to reach the BoE's target level of 2%, especially after the post-Brexit shock on financial markets. At the meantime, a separate report showed that UK input producer prices increased 1.8% for June after a 2.6% gain previously and well above the consensus expectations of 1.0% increase. The annual decline slowed sharply to 0.5% from 4.4% previously and should turn positive next month. The scope for a loose monetary policy will be significantly reduced if output prices accelerate over the next few months.
Upcoming fundamentals: EU investment, debt and current account
On Wednesday data from the EU will set the tone for the EUR/USD pair, as at 8:00 GMT three major releases of information are scheduled. Euro Area Investment Fund Statistics and Monthly Indicators on Government Debt Securities are the two publications, into which most traders and investors will dig into, as the primary source of information today. However, the EU Current Account for May will also be released at that time, and it is forecasted to be positive by 24.9 billion EUR.
EUR/USD fluctuating around 1.10 on Wednesday
Daily chart: The Euro depreciated on Tuesday against the US Dollar, as the currency exchange rate fell below the weekly PP at 1.1070, while it opened Tuesday's trading session at 1.1075 and ended the day at 1.1019. On Wednesday morning, the pair has slightly moved lower, as it started day's trading at yesterday's closing level of 1.1019 and has moved to 1.1015 by 5:00 GMT. Below the rate is located the weekly S1 at 1.0975, which might be reached, as daily aggregate technical indicators forecast a downwards movement for the pair today.Daily chart
Hourly chart: The hourly chart shows that the EUR/USD pair kept fluctuating between the 200-hour SMA from the upside at 1.1077 and the weekly PP combined with 20-hour SMA below at 1.1070 until 6:00 GMT on Tuesday. Afterwards the currency exchange rate met stronger resistance, as the 200-hour SMA was joined by the 55-hour SMA. Due to the stronger resistance from the upside, the pair fell below the support provided by the cluster below. The rate fluctuated for three hours until it started falling and reached 1.1010 level by 15:00 GMT. Since then the pair has been fluctuating around that level, and daily aggregate technical indicators forecast that it will move lower during the day.
Hourly chart
SWFX sentiment neutral on Wednesday
OANDA trader bearish sentiment has decreased compared to Tuesday's 56.16%, as, at the moment, 52.42% of OANDA open positions are short. In addition, SAXO Bank clients have also decreased their bearish stance, as their open short positions are now at 52.02% compared to 58.68% of last trading session.