EUR/USD trades above 1.0709

Source: Dukascopy Bank SA
  • SWFX market sentiment is 58% bullish
  • Trader pending orders are 65% to sell
  • Pair opened Wednesday's session at the 1.0720 level
  • Aggregate daily technical indicators bet EUR/USD will remain unchanged
  • Economic events to watch over the next 24 hours: US PPI; US Capacity Utilization Rate; US Industrial Production
The common European currency slightly moved upwards against the US Dollar on Wednesday morning. However, the pair retreated back shortly. It is most likely that the US Dollar will make another attempt to break through the support provided to the Euro by the January Low and the weekly S1. That will occur due to the fact that short term SMAs and the Bollinger bands have moved lower, and they have begun to provide resistance to the currency exchange rate. However, daily aggregate technical indicators forecast no change in the rate by the end of the day.

The single currency economy expanded in the third quarter, showing a 0.3% in the region's gross domestic product (GDP) on the previous three months and up 1.6% on a yearly basis. The figures were spurred by a rebound in smaller countries, including Portugal, which saw its fastest growth pace since 2013. During the last week, the European Commission cut its GDP forecasts for the euro area on advanced political uncertainty and weaker global trade. The EU expects the currency bloc to grow 1.7% this year and 1.5% in 2017, after climbing 2% in 2015. In the meantime European stocks were mixed on Tuesday, as market sentiment remained globally positive following the election of Donald Trump as president of the United States last week, while disappointing German third-quarter growth weighed. Moreover, earlier on Tuesday, preliminary data showed that German gross domestic product went up 2% in the third quarter, disappointing expectations for an increase of 0.3% and down from a growth rate of 0.4% in the previous quarter.

US retail sales posted a better than expected increase last month, suggesting economic strength and increasing chances for a December interest rate hike. The US Department of Commerce said on Tuesday retail sales climbed 0.8% on a monthly basis in October, following September's upwardly revised gain of 0.5% and surpassing the 0.5% increase forecast. Year-over-year, retail sales grew 4.3% last month. Excluding volatile items such as motor vehicles and parts, retail sales advanced 0.8% in October, whereas economists expected them to increase just 0.5%. Meanwhile, the preceding month's reading was revised up to 0.7% from the originally reported rise of 0.5%. The October stronger than expected retail sales supported the view that the Federal Reserve will raise interest rates at its next policy meeting on December 13-14. The last time the Fed increased its key rate was December 2015, and kept its steady since then because of low inflation rates. Back in the Q3, the US economy expanded at an annual rate of 2.9% and it is set to grow 3.1% in the Q4, according to the latest economic growth forecasts released by the Atlanta Fed. As a result, the US Dollar jumped markedly against the Euro, with the EUR/USD pair declining to $1.0733 from $1.0759 ahead of the release.

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Upcoming fundamentals: US data

During today's trading session fundamental data affecting the markets will come from the US. At the forefront and the strongest indicator of the strength of the US economy and the Greenback will be the PPI at 13:30 GMT. Afterwards, at 14:15 GMT US Capacity Utilization Rate and US Industrial Production data will be available.



EUR/USD in limbo between levels of significance

Daily chart: The common European currency slightly surged on Wednesday morning against the US Dollar, as the currency exchange rate was in a rebound against the January low level of 1.0709. Previously, during Tuesday's trading session the currency pair bounced between the January low level and the March low level of 1.0822. In addition, the March low is strengthened by the first monthly support level at 1.0806. Moreover, the January low is supported by the lower Bollinger band at 1.0695 and the weekly S1 at 1.0688. It is most likely that the rate will continue to bounce between the two clusters.

Daily chart
© Dukascopy Bank SA

Hourly chart: The hourly chart reveals that the EUR/USD currency exchange rate reached the monthly S1 at 1.0806 at 8:00 GMT. Afterwards, the pair bounced off of it and fell to levels near the January low at 1.0714. However, at 8:00 GMT the 55-hour SMA moved in from the upside, strengthened the monthly S1 and afterwards continued its path lower. Most recently it moved through the middle of the zone between the monthly and weekly S1s and provided resistance to the rate. It can be seen on the chart that in the previous weeks the SMA was a strong enough force to pressure the pair lower. Due to that it is suggestable to keep watching, what not only the 55-hour, but all of the SMAs do, as they come down.

Hourly chart
© Dukascopy Bank SA


Traders remain bullish

Traders have not changed their opinion since yesterday at all. Open positions remain 58% long, and trader set up orders are still bearish, namely 65% of pending commands are to sell.


OANDA traders have increased their bearish outlook, as 66.04% of open EUR/USD positions are long on Tuesday, compared to 62.11% long positions on Tuesday. Meanwhile, SAXO Bank clients have shifted their outlook and become slightly bearish, as 50.54% open positions are short now, compared to 51.49% long positions during the previous trading session.

Spreads (avg,pip) / Trading volume / Volatility



Average forecast says EUR/USD will trade around 1.09 in February

Traders, who were asked about their longer-term views on EUR/USD between October 16 and November 16 expect, on average, place the currency pair to trade around 1.09 in the middle of February. Though 43% (+1%) of participants believe the exchange rate will be generally above 1.10 in ninety days, with 16% (+1%) alone seeing it above 1.16. Alongside, 58% of those surveyed reckon the price will trade below 1.10 in three months.

© Dukascopy Bank SA

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