- SWFX market sentiment is 63% bearish
- Trader set up pending orders are 57% short
- Pair opened Monday's session at the 1.1309 level
- Aggregate daily technical indicators bet EUR/USD will surge
- Economic events to watch over the next 24 hours: French Flash PMI Manufacturing (Aug); French Flash PMI Services (Aug); French PMI Composite (Aug); German Flash PMI Manufacturing (Aug); German Flash PMI Services (Aug); German PMI Composite (Aug); EU Flash PMI Manufacturing (Aug); EU Flash PMI Services (Aug); EU PMI Composite (Aug)
German producer prices grew faster than expected last month, official data revealed on Friday. According to the German Federal Statistics Office (Destatis), the Producer Price Index (PPI) rose 0.2% month-over-month a non-seasonally adjusted basis in July, compared to the 0.4% hike see in the previous month, whereas market analysts anticipated the indicator to come in at 0.1% in the reported month. On an annual basis, producer prices dropped 2.0% in the seventh month of the year, following June's 2.2% fall, while economic desks expected the PPI to fall 2.1% year-over-year in July. In the meantime, energy prices fell 6.2%, whereas durable consumer goods jumped 1.2% and intermediate consumer goods slipped 1.8% in the same month. The data provided evidence that the Euro zone's largest economy recovered slightly from the deflationary pressure. Nevertheless, analysts remain cautions, arguing that there is a strong deflationary pressure coming from the latest sharp increase in the value of the Euro against the British Pound, driven by Britain's decision to leave the European Union. In contrast with the Consumer Price Index (CPI), the PPI measures prices changes at the manufacturing and wholesale level and looks at three areas of production: industry-based, commodity-based and commodity-based final demand-intermediate demand.
Consumer prices in the Euro zone rose slightly on an annual basis in July, official data showed on Thursday. According to final estimates from Eurostat, the Consumer Price Index (CPI) in the region grew 0.2% year-over-year on a non-seasonally adjusted basis last month, up from the 0.1% hike seen in the preceding month and in line with analysts' expectations. On a monthly basis, consumer prices in the 19-nation currency bloc fell 0.6% in July, following the previous month's 0.2% gain and falling behind the 0.4% drop forecast. Meanwhile, so-called core inflation, excluding alcohol, tobacco, food and energy, jumped 0.9% on a yearly basis in the same month, unchanged from last month's reading and in line with market expectations. Energy prices fell 6.7% on an annual basis and 1.0% on a monthly basis, whereas prices for services, the largest component of the bloc's economy, increased 1.2% year-over-year. Back in June, the annual rate of inflation in the Euro zone rose 0.1% for the first time since January. In December 2015, the Euro zone fell into deflation for the first time since October 2009, forcing the European Central Bank (ECB) to launch its massive quantitative easing programme. The main objective of the central bank's monetary policy is to reach price stability across the region. The ECB strives for an inflation rate of below, but close to, 2% over the medium term. June
Upcoming fundamentals: PMIs from Europe
The markets will be quiet during Monday's trading session, as no notable, fundamental data releases are set to be made during the session. However, traders have to wake up early on Tuesday, as beginning at 7:00 GMT PMI data will start flowing in from the EU. The PMI data will consist of three indicators for each country for August, which are the Flash PMI Manufacturing, Flash PMI Services and PMI Composite. First three will be released by the French at 7:00 GMT. Afterwards, the Germans are set to announce their data at 7:30 GMT. Last but not least from the notable indicators will be the common PMI's for the EU at 8:00 GMT.
EUR/USD retreats below 1.13 mark on Monday
Daily chart: The common European currency began a retreat against the US Dollar on Friday, and the pair continues to move lower on Monday, as by 5:00 GMT it had reached below the newly formed, weekly PP at 1.1281. As the weekly PP's support has been passed, it is most likely that the currency exchange rate will find support in the monthly R1 at 1.1263 and rebound against this level. In addition, the daily aggregate technical indicators forecast a surge for the pair during today's trading session.Daily chart
Hourly chart: The hourly chart for the EUR/USD pair shows that it continued Friday's fall on Monday. However, the currency exchange rate did find temporary support in various levels, as it first stopped at the 20-hour SMA at 1.1335 from 2:00 to 6:00 GMT on Friday. Afterwards, the pair found support in the 55-hour SMA from 8:00 GMT to 20:00 GMT on Friday. However, with the start of Monday's trading session, which began on Sunday 21:00 GMT the rate fell below the 55-hour SMA, and has fallen through various levels to find support in the weekly pivot point at 1.1291, around which the rate has been fluctuating ever since.
Hourly chart
Traders increase bearish sentiment on Monday
OANDA trader bearish sentiment has increased compared to Friday's 65.18%, as, at the moment, 66.70% of OANDA open positions are short. In the meantime, SAXO Bank clients have decreased their bearish stance, as their open short positions are now at 68.27% compared to 70.43% of last trading session.