- SWFX market sentiment is 51% bullish
- Pending commands in the 100-pip range 62% short
- Pair opened Thursday's session at the 1.1013 level
- Aggregate daily technical indicators bet EUR/USD will depreciate
- Economic events to watch over the next 24 hours: ECB Rate (July 21); ECB Press Conference; US Initial Jobless Claims (Jul 16); Philly Fed Manufacturing (July); US HPI (May); Existing Home Sales (June); US Leading Indicators (June)
Euro zone and European Union consumer confidence fell markedly in July, the European Commission reported releasing its monthly indicator, in a new sign of weaker morale after the 23 June British vote to leave the European Union. The European Commission's flash estimate showed that the mood of shoppers in the currency bloc decreased by 0.7 points to minus 7.9 in July from an upwardly revised minus 7.2 in June. That was lower than the minus 7.3 points estimated by markets. The marked drop in July follows a slight fall in June and two consecutive rises in April and May. Meanwhile, the figures for the European Union as a whole showed a much worse drop of 1.8 points to -7.6, a level not seen in two years. The indicator for the bloc as a whole is now below the Euro zone indicator for the first time in years. A lot of economists believe that if this trend continues, the decline in confidence threatens to weaken the bloc's already modest economic recovery. Propelled by a gradual decline in unemployment and lower energy prices, growth has been driven by rising consumer spending over recent quarters, while demand for exports has been slowing.
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: ECB rate and various US data
On Thursday the European Central Bank announces its rate decision at 11:45 GMT. However, most experts forecast that the rate will remain at 0.00%. Afterwards, at 12:30 GMT the ECB Press Conference will start, where the heads of the ECB will explain their decision. In the meantime, at 12:30 GMT the US Initial Jobless Claims for the week of July 16 will be released, and the Philly Fed Manufacturing index will be published at the same time. At 13:00 GMT the US home price increase for May will be released. Last but not least, at 14:00 GMT the US will send out even more data, as Existing Home Sales and Leading Indicators for June will be published. All the data combined, is most likely to show the direction of the EUR/USD pair.
EUR/USD at 1.1030 on Thursday morning
Daily chart: The common European currency remained almost unchanged against the US Dollar on Wednesday, as during the day's trading session the pair moved slightly lower. The currency exchange rate started day's trading at 1.1019 and ended the day at 1.1013. However, on Thursday morning the pair had already moved to 1.1034 by 4:45 GMT, as it was pressured by the lower Bollinger band at 1.1013, which had moved northward due to yesterday's low volatility. In the meantime, daily aggregate technical indicator continue to forecast a fall for the pair today.Daily chart
Hourly chart: The hourly chart shows that the EUR/USD pair fell below the 1.10 mark at 6:00 GMT on Wednesday. However, afterwards the pair started to steadily surge, as it climbed only hindered a few times by the 20-hour SMA at 1.1013 at 12:00 GMT and the upper Bollinger band at 1.1029 at 1:00 GMT. In the most recent hours the currency exchange rate has once again reached the upper BB and bounced off of it.
Hourly chart
SWFX sentiment becomes slightly bullish on Thursday
OANDA trader bearish sentiment has decreased compared to Wednesday's 52.42%, as, at the moment, 51.27% of OANDA open positions are short. In the meantime, SAXO Bank clients have slightly increased their bearish stance, as their open short positions are now at 52.76% compared to 52.02% of last trading session.