- SWFX market sentiment is 61% bearish
- Trader set up pending orders are 53% short
- Pair opened Tuesday's session at the 1.1189 level
- Aggregate daily technical indicators bet EUR/USD will surge
- Economic events to watch over the next 24 hours: Italian Retail Sales (July); EU Economic Confidence (August); German CPI (August); German HICP (August); US S&P/CS 20-City HPI (June); US Consumer Confidence (August);
The Federal Reserve's (Fed) favorite measure of inflation held steady in the seventh month of the year, official data revealed on Monday. According to the Bureau of Economic Analysis, the Personal Consumption Expenditures Price Index (PCE), excluding the volatile food and energy components, rose 1.6% year-over-year in July, unchanged from last month, while market analysts anticipated a slight decrease to 1.5% in the reported month. On a monthly basis, the core PCE grew 0.1% in July, in line with analysts' expectations and the previous month's reading. The overall PCE advanced 0.8% on a yearly basis in the same month, following June's 0.9% and meeting market forecasts. The data also showed that personal spending climbed 0.3% on a monthly basis in July, down from June's upwardly revised 0.5% gain, whereas personal income jumped 0.4% on the same basis in July, compared to last month's upwardly revised 0.3% hike. Both readings came in line with analysts' projections. Federal Reserve Chairwoman Janet Yellen left the door open for a hike this year during her speech in Wyoming, arguing that the US economy created a lot of jobs lately and it is on a moderate growth path, despite recent disappointing economic data.
The US economy expanded less than initially estimated in the Q2 of 2016, fresh data revealed on Friday. According to the second estimate released by the Commerce Department, the US GDP grew 1.1% over the Q2, whereas the first estimate suggested that the economy rose 1.2% in the reported quarter; however, the reading came in line with market forecasts. The US economy grew 0.8% in the Q1 and 1.0% in the first half of 2016. The downward revision was mainly driven by higher imports and weak spending by state and local governments. Meanwhile, Personal consumption growth was revised up to 4.4% from 4.2% reported earlier, the fastest pace since the Q4 of 2014. The data showed that corporate profits dropped 1.2% in the Q2, following the 3.4% gain seen in the Q1. Core personal consumption expenditures, which exclude volatile food and energy prices, rose to 1.8% from 1.7%. Separate data released by the Commerce Department showed the US trade deficit fell to a seasonally adjusted $59.3 billion last month, compared to June's $64.5 billion gap, whereas market analysts anticipated a slight drop to $62.3 billion in July. Exports jumped $2.9 billion, while imports declined $2.4 billion. Wholesale inventories rose 0.2% month-over-month and 0.3% year-over-year. Retail inventories fell 0.4% on a monthly basis, but increased 4.2% on an annual basis.
Upcoming fundamentals: Various EU data and US Consumer Confidence
Tuesday is a busy day for traders, who prefer to trade on fundamental data releases, as there will be a lot of data released on Tuesday. First of all, the Italians release their retail sales data for June at 8:00 GMT, and the sales are expected to remain unchanged on a month-to-month basis. Afterwards, at 9:00 GMT the common EU Economic Confidence indicator for August will be released. At 12:00 GMT the Germans will show two indicators for August, as the CPI and HICP changes in percentage will be released on a monthly and annual basis. In the afternoon of the day, data from the US will start pouring in, as at 13:00 GMT the S&P/CS 20-City HPI index for June will be released. However, more impact on the strength of the US Dollar will be done by the US Consumer Confidence index for August, which will be released at 14:00 GMT.
EUR/USD trades lower on Tuesday morning
Daily chart: The common European currency is threading lower against the US Dollar, as the rate has retreated below the Monday's opening price of 1.1174. Previously, on Monday the rate bounced between 20 and 100-day SMAs from the upside around 1.1215 and the 55-day SMA from the downside at 1.1151. It seem that the fall of the rate on Tuesday morning is a continuation of the previous limbo. However, as the SMAs have a downwards aimed direction, it is most likely that the rate will fall, as soon as it stops bouncing between the levels.Daily chart
Hourly chart: The hourly chart for the EUR/USD pair shows that the rate was falling on Monday morning until it encountered the lower Bollinger band at 1.1176 at 11:00 GMT. The pair rebounded against the band and began a surge until it reached the 20-hour SMA at 1.1191 by 18:00 GMT. The currency exchange rate was then struggling against the simple moving average for six hours, when the rate fell back to the lower Bollinger band at 1.1170, and it rebounded against it instantly. Due to that it can be clearly stated, that the rate is not affected by weekly or monthly levels but is rather fluctuating in a stagnant rhythm.
Hourly chart
Trader sentiment unchanged on Monday
OANDA trader bearish sentiment has decreased compared to Monday's 58.02%, as, at the moment, 57.09% 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 62.14% compared to 63.42% of last trading session.