EUR/USD reaches new low levels

Source: Dukascopy Bank SA
  • SWFX market sentiment is 52% bullish
  • Trader pending orders are 60% to sell
  • Pair opened Wednesday's session at 1.0578
  • Upcoming Events: US CPI; US Core CPI; US Retail Sales; US Core Retails Sales; Janet Yellen Testifies
The common European currency continues its way downwards against the Greenback, as the pair was in its fifth consecutive session of losses. In addition, most clues indicate that the currency rate is set to lose even more and soon reach the 1.05 mark, as the next notable support levels on Wednesday were located just below that level.

US producer prices posted the largest increase in more than four years last month amid higher energy-related production costs, official figures revealed on Tuesday. The US Labor Department reported its Producer Price Index advanced 0.6% in January, while market analysts expected the Index to remain unchanged from the previous month at 0.3%. That marked the largest gain since September 2012. However, on an annual basis, producer prices climbed just 1.6% in the first month of 2017, after a similar increase in December.

In the meantime, the so-called core PPI, which excludes volatile items, jumped 0.4% month-over-month in January, compared with analysts' expectations for an unchanged reading of 0.2%. Year-over-year, core producer prices grew 1.6% last month, following December's gain of 1.7% and providing support for the view that the Federal Reserve could raise rates in the upcoming months as promised. Back in December, the Central bank raised its overnight rate to a range of 0.50-0.75% and projected three more rate hikes in 2017. The Federal Reserve Chair Janet Yellen said on Tuesday that the Bank would probably increase rates already at its next policy meeting in March. Following Janet Yellen's comments, the US Dollar hit its three-week high against a basket of currencies, while US government bonds dropped markedly.

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Upcoming events: CPI, Retail Sales and Yellen continues to testify

It is the second day of Janet Yellen, chairwoman of the Fed, testifying to the US Congress. That is set to cause the most fluctuations, as the chair of the Federal Reserve is set to give fundamental information regarding US monetary policy. She will begin to testify at 15:00 GMT. However, before that there will be other data releases, which might influence the markets. Particularly, at 13:30 GMT, a package of US fundamental data will be out. The package will consist of US CPI, Core CPI; Retail Sales and Core Retail Sales.



EUR/USD marks a week of losses

Daily Chart: The common European currency continues its path lower against the US Dollar, as the currency exchange rate continues exactly as forecasted. The pair has reached the weekly S1, which is located at 1.0568. The rate has found support in the weekly level of significance. However, it is clear that the Euro weakness is set to continue to fall. In that case the closest notable support level will be located at 1.0496. Although, it is most likely that the currency exchange rate will fluctuate above the recently found support for some time before continuing the set path.

Daily chart
© Dukascopy Bank SA

Hourly chart: The hourly chart reveals that the currency exchange rate did not find support in the weekly S1, but rather, to be precise, in the lower trend line of a short term channel, which can be mapped out on the hourly chart. However, the rebound has been short lived. The rate is once more moving lower, as it approaches the lower Bollinger band on the hourly chart, which is located at 1.0556. In addition the Bollinger band is being support by the before mentioned descending channel's lower trend line. Due to this factor the hypothesis of a slow descent rather than a sharp fall is strengthened.

Hourly chart
© Dukascopy Bank SA


Markets are neutral bullish

SWFX traders remain neutral bullish, as 52% of trader set up orders are long on Wednesday. In the meantime, 60% of trader set up orders are to sell the Euro.


OANDA traders also remain neutral bullish, regarding the pair, as 53.02% of open EUR/USD positions were long on Wednesday. In the meantime, SAXO bank traders are almost perfectly neutral, as 50.14% of open positions are short, compared to 52.39% previously.

Spreads (avg,pip) / Trading volume / Volatility



Average forecast says EUR/USD will trade around 1.07 in May

Traders, who were questioned on their longer-term views on EUR/USD between January 15 and February 15 expect, on average, the currency pair to trade around 1.07 by the middle of May. In general, 52% (+1%) of participants believe the exchange rate will be generally below 1.06 in ninety days, and 24% (+1%) see it below 1.02. In the meantime, 18% (-3%) of those surveyed reckon the pair will trade above 1.12 in three months.

© Dukascopy Bank SA

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