- SWFX market sentiment is 55% bullish
- Trader pending orders are 63% to sell
- Pair opened Tuesday's session at the 1.0614 level
- Aggregate daily technical indicators bet EUR/USD will fall
- Economic events to watch over the next 24 hours: US Preliminary GDP; US CB Consumer Confidence; FOMC Member Dudley Speaks; FOMC Member Powell Speaks
Corporate lending in the Euro zone advanced at the fastest pace since June 2011 in October, while the total amount of currency in circulation fell, official figures showed on Monday. According to the European Central Bank, lending to firms rose 2.1% on a monthly basis in October, the fastest pace in more than five years, following the preceding month's gain of 2.0%. Lending to households climbed 1.8% on an annual basis in the same month, unchanged from the September reading, whereas market analysts anticipated a slight increase to 1.9%. A measure of the money supply in the region, known as M3, grew 4.4% year-over-year in October, down from the prior month's 5.1% and below the 5.0% increase market forecast. The Central bank's policymakers are widely expected to extend their quantitative easing program by six months at their next meeting on December 8. According to the OECD's latest forecasts published on Monday, the Euro zone is set to grow 1.7% in 2016 and 1.6% in 2016, both figures were revised up from the September estimates despite the post-Brexit uncertainties. Moreover, later on the same day, Mario Draghi said in his speech to the European Parliament that the economy managed to overcome major challenges caused by Britain's decision to leave the European Union.
German business sentiment remained unchanged in November, a private survey revealed on Thursday. The Munich-based Ifo economic institute reported on Thursday that its Business Climate Index came in at 110.4 in the reported month, while September's reading was unchanged at 110.4 in November, after the preceding month's reading was revised down to 110.4 from 110.5. Market analysts anticipated a slight increase to 110.6 points. The November figure suggests that executives remain positive about the country's economic growth, despite the uncertainties hanging over Brexit negotiations and Donald Trump's presidency. Back in October, the Index hit its highest level in more than two and a half years. In the meantime, the Current Assessment Index jumped to 115.6 in November from 115.1 points registered in the prior month, surpassing the 115.0 market forecast. The Business Expectations Index, which tracks sentiment in the next six months, declined to 105.5 during the reported period from 105.9 in October, falling behind analysts' expectations for 106.0. As a result, the Euro rose slightly against the US Dollar, trading at 1.0557 from 1.0556 ahead of the release, but fell against the Sterling, trading at 0.8493 from 0.8494 ahead of the data.
Upcoming fundamentals: US data dictates the rules
As it was expected, Mario Draghi did not say much new on Monday. However, Tuesday is a lot more interesting day, as loads of US data will be released. Moreover, these data releases are set to cause short term volatility in the markets. US Preliminary GDP is set to be released at 13:30 GMT and at 15:00 GMT CB Consumer Confidence is set to be out. In addition, there are a few speeches set for the day, which will reveal additional information. First of all FOMC member Dudley will give a speech at 14:15 GMT. Secondly, FOMC member Powell will speak at 17:40 GMT.
EUR/USD in limbo near 1.06
Daily Chart: On Tuesday morning the common European currency fluctuated around the 1.06 level against the US Dollar. The currency exchange rate had moved lower and found support in the weekly PP at 1.0589. However, the pair did not attempt to break through the resistance at 1.0632, where the monthly S2 is located at. In the meantime, the rate remains inside the descending channel pattern, in which it entered on November 13. The pair has not confirmed the pair's upper trend line, which means that the rate might continue to trade flat until the end of this week.Daily chart
Hourly chart: The hourly chart for the EUR/USD reveals that the rate's initial morning jump was stopped and reversed by a combination of the weekly R1 and the medium term channel's upper trend line. After the following fall, at 14:00 GMT, the rate stopped above the 1.0560 level, from which it began to recover. And that recovery was stopped by the 200-hour SMA at midnight. Since then it can be seen that the pair is being squeezed in by the various SMAs from the upside and the weekly PP from the downside at 1.0589.
Hourly chart
Trader slightly reduce the bullish sentiment
SWFX traders have slightly decreased their bullish outlook, as 55% of open positions were long on Tuesday, compared to 56% on Monday. Meanwhile, 63% of trader set up orders are to sell the pair.
OANDA traders remain bullish, as 65.78% of open EUR/USD positions were long on Tuesday morning, compared to 66.19% long positions on Monday. Meanwhile, SAXO Bank clients have increased their bullish outlook, as 55.55% open positions are long, compared to 52.72% during the previous trading session.