- SWFX market sentiment is 62% bearish
- Trader pending orders 62% bearish
- Pair opened Monday's session at 1.1212
- Upcoming Events: German ZEW Economic Sentiment
The common European currency stopped its fall on Friday and began a surge, which lasted into Monday. However, there are various signs indicating that the decline of the pair might soon resume, as the pair remains in a short term descending channel pattern. Meanwhile, on a larger scale a decline of the pair is still expected.
As markets expected, the European Central Bank left its interest rates and monetary policy unchanged at its Thursday meeting; however, it signalled that further rate cuts were highly unlikely. Policymakers acknowledged that the 19- country currency bloc was performing strong economically but inflation remained growth remained subdued, forcing the Bank to keep rates and policy on hold. However, policymakers gave a balanced view on the Euro zone economy. Still, the ECB did not even consider an option of lowering its 2.3T euro asset purchases.
A quiet Monday for fundamentals
During Monday's trading session no notable events are scheduled, which could affect the financial markets even slightly. The only relevant event, which might influence the strength of the EUR/USD currency exchange rate in the next 24 hours, will be the German ZEW Economic Sentiment. The data will be published at 09:00 GMT during Tuesday''
EUR/USD near 1.12 mark on Monday
The common European currency rebounded in the second half of Friday's trading against the US Dollar, and the pair extended the gains into Monday's trading. However, various signs are indicating that a reversal of the direction of the currency pair might soon occur. First of all the hourly chart reveals that the Euro has encountered the resistance of the 55-hour SMA at 1.1212 and the newly calculated weekly PP at 1.1216. In addition, a descending short term channel has been identified. In accordance with the pattern even if the rate passes the mentioned resistance levels, it will still face the combined resistance of the channel's upper trend line and the 100 and 200-hour SMAs. All of these resistance levels are slowly moving lower.
Hourly Chart
On the daily chart the currency exchange rate gives clues regarding an upcoming decline, as the pair has not reached the medium term channel pattern's lower trend line, as it was expected previously. Meanwhile, on the daily chart the pair is squeezed in between the weekly PP at 1.1216 from the upside and the 20-day SMA at the 1.1206 mark. This fact strengthens a hypothesis that the future move will be a sharp one, as a break out could occur.
Daily Chart
Read More: Technical AnalysisBearish SWFX sentiment persists
SWFX traders are 62% short in regards to the pair on Monday. Meanwhile, 51% of set up orders are to sell the Euro, compared to 57% of buy orders previously.
OANDA trader sentiment remains largely bearish, as 68.98% of open positions are short. However, SAXO bank clients have decreased their short positions amount, as 63.46% of open positions are short, compared to 61.47% on Friday.
Spreads (avg, pip) / Trading volume / Volatility
Average forecast says EUR/USD will trade around 1.11 in September
Traders, who were questioned on their longer-term views on EUR/USD between May 12 and June 12 expect, on average, that the currency pair may trade slightly above 1.11 during the first week of September. In general, 48% (+6%) of participants believe the exchange rate will be above 1.12 in the following ninety days. Meanwhile, 43% (-2%) of respondents expect to see the rate below 1.10.