- SWFX market sentiment is 58% bearish
- Trader pending orders 56% bullish
- Pair opened Wednesday's session at 1.1549
- Upcoming Events: US Building Permits
The common European currency had slightly retreated against the US Dollar on Wednesday morning, as it encountered resistance. The currency pair is at a critical point, as it can be observed that the pair has hit the upper trend line of a massive scale descending channel. The rate has two options. One is to break the resistance and score new heights. Secondly the pair might begin a decline after a failure to pass the mentioned level of significance.
Consumer inflation in the Euro zone rose in line with analysts' forecasts last month, official figures revealed on Monday. Eurostat reported that its Final Consumer Price Index came in at 1.3% in June, matching the flash estimate and falling down from 1.4% registered in preceding month. Meanwhile, the so-called core inflation rate rose 1.1% on an annual basis, following May's 0.9% increase.
US Building Permits
A data package from the US side will be released at 12:30 GMT. At that time the US Building Permits number will be out. It will be accompanied by the US Housing Starts data. However, historically these data sets have shown only medium impact on the markets, which is not large enough for swing traders to be interest into.
EUR/USD consolidates on Wednesday
As it was expected the common European currency extended its gains against the US Dollar until the middle of Tuesday's trading session. However, it was also expected that a reversal of the direction of the rate could take place, and that occurred in the second half of the day's trading. The change in direction happened due to the pair encountering the resistance of a massive scale descending channel pattern in the range from 1.1550 to 1.16. It is most likely that the pair will soon make another attempt at the resistance and begin a medium length period of fluctuations around it. Although, in regards to today's trading session, the Euro is likely going to retreat down to the combined support cluster of the weekly R1 and the 55-hour SMA below the 1.1520 mark. Afterwards a rebound could occur.
Hourly Chart
The daily chart reveals that the dominant trend line was actually passed. The currency exchange rate surged above the exact level of the line until it reached the resistance of the 20-day SMA, which at the moment was located at the 1.1585 level. In addition, it can be observed that the 20-day SMA is approaching the 1.14 mark, and it could provide notable support in the next few weeks.
Daily Chart
Bearish sentiment persists
The situation in the SWFX markets remains unchanged, as traders remain bearish with 58% of open positions being short, and 56% of trader set up orders are to buy the Euro.
Traders of OANDA are bearish, as 68.64% of open positions are short. Meanwhile, SAXO bank clients also remain at the bearish front, as 67.14% of their trader open EUR/USD positions are short.
Spreads (avg, pip) / Trading volume / Volatility
Average forecast shows EUR/USD will trade below 1.14 in October
Traders, who were questioned on their longer-term views on EUR/USD between June 19 and July 19, expect, on average, that the currency exchange rate may trade near 1.14 during the third week of October. In general, 47% of participants believe the exchange rate will be above 1.14 in the following ninety days. Meanwhile, 27% (-3%) of respondents expect to see the rate below 1.12.