- SWFX market sentiment is 55% bearish
- Trader pending orders are 58% to sell
- Pair opened Wednesday's session at 1.0731
- Upcoming Events: Belgian NBB Business Climate; US HPI; US Crude Oil Inventories
Manufacturing activity in the Euro zone rose at its fastest pace since 2011 in January, a preliminary survey showed on Tuesday. IHS Markit reported its Purchasing Managers' Index for the region's manufacturing sector advanced to 55.1 points in January, up from December's 54.9. The number slightly topped economists' expectations for an increase of 54.8. The January figure marked the best reading in 69 months. In the meantime, the flash Services PMI declined to 53.6, its three-month low, following the December upwardly revised reading of 53.7 and missing economists' forecasts for 53.9. The survey revealed that the PMI Output Index decreased slightly to 54.3 from the previous month's 54.4 points. In addition, the data showed a rebound in employment, which climbed to the highest level since February 2008.
Separately, Markit also reported that the preliminary PMI Index for the German manufacturing sector climbed to 56.5 points from 55.6 in December, while the Services PMI fell to 53.2 points from 54.3. Both manufacturing and services sectors in Germany are set to grow in the upcoming months, despite ease in the private sector. According to the latest projections, companies are supposed to avoid political risks and focus on sales growth in 2017.
Upcoming events: Minor news from both sides
Wednesday's trading session is set to be a quiet one for fundamental data release volatility traders, as there are only few minor data releases scheduled for the day. In the EU the Belgian NBB Business Climate will be released at 14:00 GMT. Data that will affect the strength of the US Dollar is set to be released at various times during the day. First of all the US HPI will be out at 14:00 GMT. Secondly, the US Crude Oil Inventories will be out at 15:30 GMT.
EUR/USD continues to move lower
Daily Chart: The common European currency continues to depreciate against the US Dollar, as the rate is in its bounce off from the upper trend line of the medium term ascending channel pattern. During yesterday's trading session the rate passed the support provided by the weekly R1 at 1.0752, and at the moment the closest notable support level on the daily chart is at 1.0666, where the weekly PP is located at. These factors combined support the previously made forecast that the currency exchange rate is about to fall to the weekly PP.Daily chart
Hourly chart: By looking at the hourly chart, the forecast of a decline can be enforced. The reason for that is that it can be seen that, as a result of the bounce off from the medium term channel's upper trend line, a descending short term channel has formed. If the rate continues in accordance with this channel, the pair will reach the weekly PP on Friday noon.
Hourly chart
SWFX traders largely bearish
SWFX traders are shorting the Euro, as 55% of open positions are bearish. Meanwhile, 58% of trader set up orders are to buy the Greenback versus the Euro.
OANDA traders decreased their bearish outlook, regarding the pair, as 54.19% of open EUR/USD positions were short on Wednesday, compared to 56.04% on Tuesday. Meanwhile, SAXO bank traders remain firmly bearish, as 63.60% of open positions were short, compared to 63.34% previously.