- SWFX market sentiment is 58% bullish
- Trader pending orders are 62% to sell
- Pair opened Tuesday's session at the 1.0627 level
- Aggregate daily technical indicators bet EUR/USD will fall
- Economic events to watch over the next 24 hours: US Existing Home Sales; EU Flash Manufacturing and Services PMI's
On Monday 21 of November ECB president Mario Draghi, during his speech has urged the European Union to stay united in the face of different challenges such as Brexit as he warned that the cohesion of Europe is being tested. Speaking in the European Parliament in Strasbourg, Mr Draghi noted that "The euro area recovery continues to proceed at a moderate, but steady, pace. It has shown remarkable resilience to adverse developments and uncertainties emanating from the global environment." said that Europe needs to respond "cohesively and decisively" to the current challenges facing Europe. Overall, Mr Draghi maintained a neutral tone and he is not prepared at this stage to offer strong hints over the likely policy action at December's policy meeting. There were also no attempts to steamroller the ECB Council into policy action. The stated above comments will maintain expectations that the ECB is not planning to announce some form of bond-buying extension, although the details are still in discussion. In the meantime, reaction to the speech was limited as markets remained in a consolidation phase with EUR/USD finding support just below the 1.0600 level.
US consumer prices see the biggest increase in six months in October amid higher gasoline and rent costs. According to the US Department of Labor, the Consumer Price Index advanced 0.4% last month, following September's gain of 0.3%. On a yearly basis, consumer prices grew 1.6% in October, the largest annual increase since October 2014, up from the preceding month's 1.5%. Both readings came in line with analysts' expectations. Nevertheless, the so-called core CPI, which excludes prices for volatile items such as energy and food, rose 0.1% in the reported month, unchanged from September, while market analysts anticipated a slight increase to 0.2%. Year-over-year, core consumer prices fell to 2.1% in October, following the prior month's 2.2% gain. Higher inflation as well as the strong labor market are likely to encourage the Federal Reserve to raise its key interest rates at its next meeting in December. The Central bank increased its key overnight interest rate in December 2015 for the first time since the global financial crisis. The Labor Department said gasoline prices surged 7.0%, up from September's 5.8%, whereas food prices remained unchanged. Within components of the core CPI, rents rose 0.4%, while medical care costs were unchanged. The price of prescription drugs rose 0.2%.
Upcoming fundamentals: US House sales and EU PMIs
Tuesday is set to be another quiet day for the US Dollar fundamental, macroeconomic data releases, as only one release is scheduled for today. It is going to be the US Existing Home Sales at 15:00 GMT. However, this publication is not even slightly likely to affect the pair by causing short term volatility. Although, EUR/USD traders have something coming in from the European continent, as on Wednesday morning the Europeans are set to release their Flash Services and Flash Manufacturing PMIs. The most important will be the French PMIs at 8:00 GMT and the German data at 8:30 GMT. Afterwards, at 9:00 GMT the common indexes for the whole union will be available.
EUR/USD trades flat near 1.06
Daily Chart: The common European currency remained flat against the US Dollar just below the monthly S2 at 1.0632. Previously, on Monday the currency exchange rate managed to rebound and surged to the before mentioned level of significance. That occurred after ten consecutive session of losses, as the Euro declined against the Greenback. However, the attempt to break through it did not succeed initially and continued into Tuesday's trading session. It is likely that the attempt will fail and the rate will retreat by the end of the day, in which case the next support level is at 1.0520.Daily chart
Hourly chart: The hourly chart for the EUR/USD pair reveals that pair attempted two times to break through the resistance put up by the monthly S2 at 1.0632. Although, the rate managed to surge almost 20 pips above the level of significance, it was forced down by the upper Bollinger band both times. However, most recently, the pair seems to have abandoned those attempts and has begun to move lower.
Hourly chart
Traders decrease bullishness
SWFX traders have decreased their bullish outlook, as 58% of open positions were long on Tuesday, compared to 59% on Monday. Meanwhile, trader set up orders are slowly becoming less bullish, as 62% of pending commands were to sell, compared to 63% on Monday.
OANDA traders have decreased their bullish outlook, as 64.96% of open EUR/USD positions are long on Tuesday, compared to 66.47% long positions on Monday. Additionally, SAXO Bank clients have decreased their bullish outlook as well, as 55.66% open positions are long, compared to 56.20% during the previous trading session.