EUR/USD trades near 1.2380 on Wednesday morning

Source: Dukascopy Bank SA
  • SWFX market sentiment is 62% bearish
  • 53% of pending orders in 100-pip range are to BUY the Euro
  • Strong support area near 1.23
  • Upcoming events: Eurozone's Flash GDP q/q, US CPI m/m, US Core CPI m/m, US Core Retail Sales m/m, US Retail Sales m/m

The US government posted a $49B budget surplus in the month of January, the Treasury Department stated on Monday. The report also showed that the US fiscal gap rose 11% to $175.7B in the four month period to January, compared to the same period a year ago.

The gap is anticipated to widen further as an aging population increases spending on retirement programs and healthcare. The proposed budget released on Monday revealed the deficit widening to $984B in 2019, assuming that Congress would adopt all of the President Trump's proposals, including cuts of spending.

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Attention on US inflation data



The Eurostat is to release the Flash GDP for the fourth quarter of 2017 at 1000GMT. The main attention in this session is turned to the US (Core) Consumer Price Index and (Core) Retail Prices to be released at 1330GMT.

Read More: Fundamental Analysis


EUR/USD tests medium-term channel

Upside momentum prevailed in the market on Tuesday, as the Euro closed the day with a 64-pip gain against the US Dollar. Along the way, the 200-hour SMA, the weekly PP and the 23.60% Fibo were breached.

On Wednesday morning, the pair was testing the upper boundary of a three-week channel down and the 1.24 mark which had provided an unbreakable resistance last week.

Technical indicators point to a period of consolidation today, as their high positioning might start to weaken in the nearest time. Some minor upside potential, however, is still apparent. Thus, gains could be capped near the weekly R1 at 1.2417, while the pair is likely to be supported by the 200-hour SMA circa 1.2350. In the meantime, US CPI data is likely to introduce volatility in the market.

Hourly Chart



The Euro has been driven by bulls for the fourth consecutive session, thus falling short from the bottom boundary of the prevailing four-month channel located near 1.2240. In case the 1.24 mark is surpassed, traders might see further advance up to 1.26 within the following weeks.  


However, it is still believed that this week's appreciation might be a short-term correction, as the pair is still expected to approach the bottom channel boundary and the 50.0% Fibo retracement at 1.2250 and 1.2172, respectively.

Daily Chart

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Traders are bearish

The number of short positions of the EUR/USD exchange rate remains 62% for the second consecutive session.

The outlook for the two currencies against the rest of the traded financial instruments is as follows: the Euro is 66% bearish and the US Dollar is 60% bullish.

OANDA traders remain bearish in this session, as 56% of open positions are short (+1%). The bearish sentiment of Saxo Bank clients stands at 58% short positions (remains unchanged).


Spreads (avg, pip) / Trading volume / Volatility

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