- SWFX market sentiment is 71% bearish
- 51% of pending orders in 100-pip range are to BUY
- 74% of pending commands are set to sell the Euro
- Upcoming events: President of Deutsche Bundesbank Jens Weidmann to speak, US Building Permits, US Housing Starts, Philly Fed Manufacturing Index, US Unemployment Claims
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.
US Building Permits
The President of the Deutsche Bundesbank Jens Weidmann is due to speak at a joint conference by the International Monetary Fund and the Deutsche Bundesbank at 0800GMT.
Meanwhile, the United States is set to publish four sets of data at 1330GMT, namely, Building Permits and Housing Starts for December, the weekly Unemployment Claims and the Federal Reserve Bank of Philadelphia's Manufacturing Index.
EUR/USD weakens after surge last week
The Euro's movement during the previous session reveals the strengthening of the bearish sentiment. After reaching a daily high of 1.2305 early on Wednesday, the pair managed to breach the 55– and 100-hour SMAs and the monthly R2.As apparent on the chart, the Euro has formed a minor descending channel. In line with this pattern, the rate should edge higher towards 1.2240. Given that this area is reinforced by the aforementioned lines, a breakout might not occur.
On the other hand, the southern barrier is set by the weekly PP, monthly R1 and the 200-hour SMA. This cluster is also likely to hold strong, thus stranding the rate in the 1.2230/15 area for the whole session.
Hourly Chart
The bearish sentiment dominated EUR/USD on Wednesday, thus resulting in a daily loss of 77 pips. This momentum south allowed to breach the monthly R2 at 1.2225, but the pair halted slightly above the 50.0% Fibo retracement at 1.2164. The Euro started this session with slight gains, thus testing the aforementioned monthly R2.
As apparent on the hourly time-frame, this area is likewise reinforced by the 55- and 100-hour SMAs. Thus, it is more likely that the bearish sentiment prevails in this session, as well.
In case the Euro continues to edge lower during the following week, this might confirm that the pair is to make a retracement from the 50.0% Fibo towards the 38.2% retracement line.
Daily Chart
Market sentiment is bearish
The bearish market sentiment has remained at the same level for the fourth 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 74% bearish and the US Dollar is 63% bullish.
OANDA traders remain bearish, as 65% of open positions are short (+1%). SAXO Bank clients are likewise bearish on the pair with 60% short positions (+3%).
Spreads (avg, pip) / Trading volume / Volatility