- SWFX market sentiment is 63% bearish
- Trader pending orders 52% bearish
- Pair opened Thursday's session at 1.1219
- Upcoming Events: Eurogroup Meetings; US Unemployment Claims; Empire State Manufacturing Index; US Import Prices; Philly Fed Manufacturing Index; US Capacity Utilization Rate; US Industrial Production
After a massive increase in volatility the EUR/USD pair traded back near the levels of the previous trading sessions. However, it could be observed that a decline might proceed the rather flat trading, as the expected fundamental events have passed and caused their massive impact on the currency exchange rate.
As markets expected, the Federal Reserve raised its interest rates at the end of its meeting on Wednesday, adding that it would start cutting its Treasury bonds and other securities this year amid solid economic growth and strong employment trends. Despite the release of weak retail sales and inflation figures earlier in the day, policymakers voted to lift its benchmark lending rate to a target range of 1.00-1.25% and predicted one more rate hike this year.
Eurogroup meetings
The main event for the day in regard to the common European currency are the Eurogroup meetings, which are taking place throughout the day. Meanwhile, data sets, which usually cause minor impact on the US Dollar, are set to be released on a large scale in the second part of the day. At 12:30 GMT most of the data will be released. At that time the US Unemployment Claims, Empire State Manufacturing Index; US Import Prices; Philly Fed Manufacturing Index are set to be out simultaneously. Afterwards, at 13:15 GMT, the US Capacity Utilization Rate and the Industrial Production data will be published. Any of these data sets might cause fluctuations, if they diverge too much from the average market forecasts, published by Bloomberg.
EUR/USD highly volatile on fundamentals
The common European currency remains near previous session opening levels against the US Dollar. However, there is a huge arch observable on the hourly chart. The jump of the currency exchange rate was caused by the US CPI and Retails Sales data set release, which turned out to be a lot less than the average market forecast. That caused the EUR/USD pair to jump and almost reach the 1.13 mark. However, at 18:00 GMT the Federal Reserve made their announcements, which strengthened the US Dollar all across the markets. As a result the pair trades in limbo around the cluster of levels of significance at just above the 1.12 mark. The rate can either retreat to the 38.20% Fibonacci retracement level at the 1.1188 level or begin a surge up to the 200-hour SMA at 1.1231 by the end of the day.
Hourly Chart
The daily chart reveals that after the increased fluctuations the currency exchange rate has begun to ignore the levels of significance, which have kept it squeezed in throughout the week. By taking into account that fact and that the pair has bounced off the resistance of the dominant ascending pattern twice, it can be forecasted that a decline is set to occur in the near future. However, the medium ascending trend still might provide support, as its borders are not clearly mapped.
Daily Chart
Bearish sentiment persists
SWFX traders are 63% short in regards to the pair on Wednesday. In the meanwhile, 52% of set up orders are to sell the Euro.
OANDA trader sentiment remains largely bearish, as 71.95% of open positions are short. Meanwhile, SAXO bank clients have not changed their stance also, as 64.49% of open positions are short, compared to 62.78% on Wednesday.
Spreads (avg, pip) / Trading volume / Volatility
Average forecast shows EUR/USD will trade below 1.12 in September
Traders, who were questioned on their longer-term views on EUR/USD between May 15 and June 15, expect, on average, that the currency exchange rate may trade above 1.11 during the second week of September. In general, 53% (+2%) of participants believe the exchange rate will be above 1.12 in the following ninety days. Meanwhile, 38% (+1%) of respondents expect to see the rate below 1.10.