Wednesday's trading session is set to be all about fundamental events. Meanwhile, technical charts demonstrate that there are more resistance levels than support for the given currency pair. This indicates that a bearish move caused by fundamentals may occur in today's trading session.
The mood of German investors improved markedly in May, official data showed on Tuesday. The Munich-based Ifo Institute for Economic Research reported that its Business Climate Index climbed to 114.6 points in the reported month, following April's 113.0 and surpassing analysts' expectations for an increase to 113.1. That marked the strongest reading since 1991. May's jump was mainly driven by Emmanuel Macron's victory in the French 2017 Presidential Election, which boosted confidence across the Euro zone. Taking into account the stronger-than-expected Ifo Index and other quite optimistic economic data, the German economy is set to hit a 0.6% growth rate in the second quarter.
Day of central bankers
EUR/USD retreats below significant resistance
Following a decline below the 1.12 mark during the second half of Tuesday's trading session, the EUR/USD currency exchange rate has retreated below a significant resistance. On Wednesday early morning, the pair was flat below the combined resistance of the monthly R2 at 1.1187 and the 61.80% Fibonacci retracement level at the 1.1190 mark. As the pair remains flat, it can be clear that clues are being expected to reveal the future short term direction. Two possibilities exist. In the case of a breaking of the resistance, the 1.13 mark will be in reach. On the other hand, a decline to the weekly PP at 1.1114 might occur.
Daily chart
Hourly chart
Read More: Technical AnalysisTraders optimistic towards the US Dollar
SWFX traders are clearly bearish on the pair, as 59% of open positions are short and 53% of trader set up orders are to sell.
OANDA traders remain largely bearish, as 67.86% of open positions are short on Wednesday, compared to 66.80% previously. In addition, SAXO bank clients are likewise bearish, as 65.98% of open positions are short, compared to 65.03% on Tuesday.
Spreads (avg, pip) / Trading volume / Volatility
Average forecast says EUR/USD will trade around 1.10 in August
Traders, who were questioned on their longer-term views on EUR/USD between April 24 and today expect, on average, that the currency pair may trade slightly above 1.11 in late August. In general, 57% of participants believe the exchange rate will be above 1.10 in the following ninety days, and 44% see it above 1.12.