- Traders are bearish with 52% short positions (-2%)
- 55% of pending orders in 100-pip range are to SELL the Euro
- Expected wide trading range in response to FOMC statement
- Upcoming events: US Current Account and Existing Home Sales; FOMC Economic Projections, Statement, Press Conference and Federal Funds Rate
The Euro strengthened against the Greenback, following the release of the EU trade balance report. The EUR/USD currency pair gained 14 base points, or 0.11%, reaching the 1.2295 level, to continue fluctuating and reaching the intraday's high around the 1.2325 area.
The Eurostat revealed on Monday that the EU trade balance data did not meet expectations, showing the trade surplus of 19.9B in January, following the downwardly revised 23.2B in the prior month. Even though the data came out less-than-expected, it was positive and it positively impacted the growth of EUR/USD currency pair. Moreover, interesting initial reactions on main pairs can be seen, where EUR/GBP stood out with a 0.20% downturn, caused by recent Brexit agreements.
All eyes on Fed
The main focus of the day is put on the Fed which is to release its Economic Projections, written statement and the Federal Funds Rate at 1800GMT. The press conference is scheduled 30 minutes later. The Federal Reserve is expected to hike its interest rate by 0.25% to 1.75%.
Meanwhile, there also two US data release of immediate importance during the day, namely, the Current Account and Existing Home Sales at 1230GMT and 1400GMT, accordingly.
EUR/USD bounces off 38.20% Fibo
The US Dollar grew stronger on Tuesday, thus pushing the EUR/USD exchange rate considerably lower. The pair started to edge south mid-session and consequently plunged 110 pips within a couple of hours, thus breaching all three moving averages and the senior channel along the way.This strong downside momentum was caused by the dismal ZEW survey which showed that German confidence fell to an unexpected low of 5.1 in February.
The first part of the day should mark a move closer to 1.2320 where several important resistance levels are located; however, it is unlikely to be surpassed.
The Fed is the main focus today. An interest hike is seemed to be priced in the market, presumably having a positive impact on the pair. Conversely, improved rate forecasts are likely to pressure the rate lower.
Hourly Chart
EUR/USD breached the 55-day SMA during the early hours of Monday, thus adding some ground to the overall bearish sentiment that is dominating the given pair.
It is expected that the pair continues its movement towards the senior channel located near 1.22 this week. The 50.00% Fibonacci retracement is likewise located nearby. This bearish scenario is supported by technical indicators on the daily time-frame.
However, the 55-day SMA might provide some support for a few sessions, thus leaving the rate stable during this time.
Daily Chart
Traders are bearish
The number of short positions of EUR/USD is 52% in this session (-2%).
The outlook for the two currencies against the rest of the traded financial instruments is as follows: the Euro is 60% bearish and the US Dollar is 52% bullish.
The bearish sentiment of OANDA traders is standing at 56% short positions today (+1%). Saxo Bank clients share the same sentiment with 59% short positions (unchanged from Tuesday).
Spreads (avg, pip) / Trading volume / Volatility