- SWFX market sentiment is 61% bearish
- Trader set up pending orders are 56% short
- Pair opened Wednesday's session at the 1.1223 level
- Aggregate daily technical indicators bet EUR/USD will surge
- Economic events to watch over the next 24 hours: Spanish PMI Service (July); Italian PMI Service (July); French PMI Service (July); German PMI Service (July); EU PMI Service (July); EU PMI Composite (July); German PMI Composite (July); French PMI Composite (July); EU Retail Sales (June); US ADP Employment Change (July); US PMI Services (July); US ISM Non-Manf. Composite (July)
US manufacturing activity contracted in July after Britain's decision to leave the European Union, official data from the Institute for Supply Management (ISM) revealed on Monday. The ISM announced that its Purchasing Managers' Index (PMI) came in at 52.6 points in the seventh month of the year, compared to last month's 53.2, its highest one-year result, whereas market analysts anticipated a slight decrease to 53.1 in the reported month. Nevertheless, the Index remained above the 50 level, which indicates expansion in manufacturing. The Index is based on data collected from about 400 manufacturing firms across the United States. Other data released on Monday showed the US manufacturing sector remained in the expansionary region, as the seasonally adjusted Markit final Manufacturing PMI for the United States equals 52.9 points in the same month, following last month's 51.3 mark and hitting its highest level since October 2015, when it climbed to 54.1 points. The July flash PMI posted 52.9, while economic desks expected the preliminary reading to come in at 51.5 points.
The Consumer Price Index in the Euro zone's largest economy, Germany, continued to rise in July, the third consecutive month of growth, the Federal Statistics Office revealed on Thursday, but remained comfortably below the target level. The flash estimate from Destatis showed that consumer prices in Europe's economic powerhouse increased 0.3% month-over-month on a non-seasonally adjusted basis in July, after rising 0.1% in the previous month, while market analysts penciled in an acceleration to 0.2% in the seventh month of the year. On annual basis, the CPI climbed 0.4% in the same month, up from last month's final reading of 0.3%. In the meantime, the German Unemployment Change report published by the German Statistics Office on Thursday revealed that the unemployment rate in the country remained at 6.1% in July, whereas the number of unemployed people in the Euro zone's number one economy dropped by 7,000 in the reported month, compared to a fall of 6,000 registered in the preceding month, while economic desks anticipated a decline of 3,000 in July. The jobless rate in Germany stayed at the lowest level in the last 20 years. The European Central Bank aims to maintain inflation rates of below, but close to, 2% over the medium term.
Upcoming fundamentals: European PMIs, retail sales and various US data
On the early morning on Wednesday the Markit will publish their PMI Services and PMI Composite indices for the EU countries for July. First will be the Spanish and Italian PMI Services at respectively 7:15 GMT and 7:45 GMT. Afterwards French and German PMI Composite and Services indices will be published at 7:50 and 7:55 GMT, and, as it is common after such releases, the common data for the whole of the EU will be compiled and published at 8:00 GMT. Later on, at 9:00 GMT EU retail sales month-to-month and annual changes in percentage for June will be published. Afterwards, at 12:15 GMT US ADP Employment Change is set to be published, and Dukascopy team will be live, as it happens, to monitor the market reaction. At 13:45 GMT US PMI Services index will be out for July. Last but not least, the currency exchange rate will be affected by the release of the ISM Non-Manf. Composite index for July.
EUR/USD above 1.12 mark on Wednesday
Daily chart: The Euro surged against the US Dollar on Tuesday, as the currency exchange rate moved from 1.1162 at the start of day's trading to 1.1221 by the end of day's trading. However, pair was struggling with the 100-day SMA at 1.1236 on Tuesday, and it moved slightly lower on early Wednesday morning, as the common European currency traded at 1.1212 against the Greenback by 5:00 GMT on Wednesday. Although, as daily aggregate technical indicators forecast a surge for the pair today, the pair is most likely to test the resistance once more.Daily chart
Hourly chart: The hourly chart of the EUR/USD currency exchange rate shows a bounce off the recently formed channel up pattern's lower trend line at 5:00 GMT at the level of 1.1178 on Tuesday. Afterwards the rate surged above 1.12 mark by 8:00 GMT, and moved lower afterwards to touch the pattern's trend line once again at 1.1186. Later on the pair formed an arch with a surge up to the level of 1.1230 and a sub-sequential fall back to the trend line at 1.1210.
Hourly chart
SWFX traders bearish on Wednesday
OANDA trader bearish sentiment has slightly decreased compared to Tuesday's 62.58%, as, at the moment, 61.01% of OANDA open positions are short. In the meantime, SAXO Bank clients have increased their bearish stance, as their open short positions are now at 68.55% compared to 67.51% of last trading session.