- SWFX market sentiment is 41% bearish
- Trader pending orders are 54% to sell
- Pair opened Thursday's session at the 1.1186 level
- Aggregate daily technical indicators bet EUR/USD will fall
- Economic events to watch over the next 24 hours: ECB Draghi's Speech, US Unemployment Claims; US Existing Home Sales.
Crude oil inventories in the United States fell sharply last week, official data showed on Wednesday. According to the Energy Information Administration's weekly report, US crude stocks dropped 6.2 million barrels to a total of 504.6 million in the week ended September 16, compared to the preceding week's decline of 0.6 million barrels, while market analysts anticipated a rise of 3.2 million barrels in the reported week. The data also showed gasoline inventories decreased 3.2 million barrels, exceeding analysts' expectations for a 567,000 barrel fall, whereas distillate stocks added 2.2 million barrels, compared to the 250,000 increase forecast. On Tuesday, the American Petroleum Institute reported a 7.5 million drop in US crude oil inventories for the same week, surpassing the 3.4 million barrel fall market forecast.
According to the official figures, industrial production across the 19-country Euro zone slipped by 1.1% in July, showing a development that could seriously weigh on the region's third-quarter growth. It is worth to point out that industrial production in the single currency region has been highly volatile for the last months, jumping in some and slumping in others. But overall, during the last 12 months it has declined, a key source of weakness for the UK economy that has struggled to create jobs and now are facing strong uncertainties after the UK's June vote to leave the European Union. In the meantime, the production of capital goods decreased by 1.7%, while energy production was 1.4% lower and durable consumer goods production lost 0.7%. The production of intermediate goods, in turn, was down 0.5% while production of non-durable consumer goods was unchanged.
Upcoming fundamentals: ECB Draghi's Speech
Fundamental news could shake the markets on Thursday, with Mario Draghi's speech and the United States unemployment figure release taking over EUR/USD movements. A forecast of 261k up from 260k will lead the nature of the surprise regarding unemployment claims at 12:30 GMT, while Draghi's introductory statement at the Quarterly Hearing will play around with the Euro value at 13:00 GMT. Existing US home sales could add to the volatility at 14:00 GMT.
EUR/USD falls below SMAs on Wednesday
Daily chart: Following four attempts at the 1.1150 demand zone, EUR/USD proved levels beneath unattainable, continuing Wednesday's bounce towards the bottom trend-line of the broken three-week and three-month channels, 1.1253 and 1.1270 respectively. The pair is currently threatening to close above the 1.1190/1120 resistance level, opening the way to 1.1223, the upper boundary of the monthly descending triangle, where it could express its weakness with a sell-off to probe the same levels of significance, but from above. In case the pair does not complete its track towards any of the targeted channels and fails at 1.1223, the triangle could prove to be mature enough to be broken at 1.1143, in case the tough 1.1160/50 area is battled successfully.Daily chart
Hourly chart: EUR/USD took on some significant volatility during the FOMC statement on Wednesday, bouncing in the range of 61 pips (0.55%) between 6:00 PM GMT and 7:00 PM GMT, posting an 83 pip gain (0.73%) in total. The pair failed at 1.1205 just moments ago, suggesting that a break above could further extend the rally. The pair has not managed to close above the 1.2022 level (September 20 high), but is currently threatening to do so. If EUR/USD fails at this level, a dive to tap 1.1150 might come with 1.1131 being the next target.
Hourly chart
Traders remain bearish
SWFX traders have slightly decreased their bearish sentiment, as 59% of open positions are short on Thursday, compared to 59% on Wednesday. In the meantime, long pending commands have advanced from 42% to 46% on Thursday morning.
OANDA traders have become slightly bearish on the pair, as 51.99% of open positions are short. In addition, SAXO Bank clients have increased their bearish stance, as open short positions now add up to 62.93% compared to 59.05% on the previous trading session.