- SWFX market sentiment is 71% bearish
- 58% of pending orders in 100-pip range are to SELL
- 74% of pending commands are set to sell the Euro
- Upcoming events: Euro zone's Final CPI y/y, US Capacity Utilisation Rate, US Industrial Production m/m, FOMC Member Mester to speak.
The European single currency fell sharply against the US Dollar, following German inflation final report on Tuesday. The EUR/USD currency pair depreciated 40 base points or 0.33% to the 1.2228 mark.
German consumer price inflation growth accelerated to the strongest level in five years, final report showed on Tuesday. Destatis stated that the country's CPI increased 1.8% on a yearly average in 2017, compared with the prior year's 0.5%. Meanwhile, a yearly increase in the inflation rate was confirmed at 1.7% in December, supported by higher energy prices. Despite a monthly 0.3% drop in wholesale prices, the report showed their 1.8% rise year-over-year in December, while the average WPI index was 3.5% higher, compared with a 2016 average.
Uneventful day
Despite several fundamentals scheduled for this session, these events are unlikely to affect the market significantly due to their muted influence. This session will start with the Euro zone's final Consumer Price Index released at 1000GMT. The US will likewise release two sets of data at 1415GMT, namely the US Capacity Utilisation Rate and the Industrial Production for the month of December.
During the second half of this session, the President of the Federal Reserve Bank of Cleveland Loretta Mester is to speak about monetary policy communication at Rutgers University at 2130GMT.
EUR/USD finds support at 55-hour SMA
Even though the Euro has increased its trading range against the US Dollar during the previous session, the pair has failed to form a distinctive movement either direction. The rate reached a new 2015/2017 high early today; however, further advance was restricted by the weekly R1 at 1.2311.Despite a failure to breach the 55-hour SMA, it seems that bears are gradually starting to provide resistance to the prevailing bullish sentiment. It is even possible that this moving average surrenders in this session, thus allowing for a test of the 100-hour SMA. If such scenario is to occur, the rate is likely to remain stranded between these lines for the remaining session.
Conversely, the 55-hour SMA could provide an unbreakable support, thus sending the rate for the 1.23 area; this psychological level is expected to hold firm.
Hourly Chart
In case the pair closes this session in the red area, it might confirm the beginning of a minor down-trend towards the monthly R1 and the weekly PP at 1.2115.
Daily Chart
Market sentiment is bearish
During the previous trading session the bearish market sentiment has remained at the same level for the third consecutive session with 71% short positions.
In the meantime, the outlook for the two currencies against the rest of the traded financial instruments is the following: the Euro is 73% bearish and the US Dollar is 62% bullish.
OANDA traders remain bearish, as 64% of open positions are short (-3%). SAXO Bank clients are likewise bearish on the pair with 57% short positions (-2%).
Spreads (avg, pip) / Trading volume / Volatility