- SWFX market sentiment is 56% bullish
- Trader pending orders are 62% to sell
- Pair opened Wednesday's session at the 1.0625 level
- Aggregate daily technical indicators bet EUR/USD will fall
- Economic events to watch over the next 24 hours: US Durable Goods Orders, US Unemployment Claims; US New Home Sales; US Revised UoM Consumer Sentiment; FOMC Meeting Minutes; German Ifo Business Climate
On Monday 21 of November ECB president Mario Draghi, during his speech has urged the European Union to stay united in the face of different challenges such as Brexit as he warned that the cohesion of Europe is being tested. Speaking in the European Parliament in Strasbourg, Mr Draghi noted that "The euro area recovery continues to proceed at a moderate, but steady, pace. It has shown remarkable resilience to adverse developments and uncertainties emanating from the global environment." said that Europe needs to respond "cohesively and decisively" to the current challenges facing Europe. Overall, Mr Draghi maintained a neutral tone and he is not prepared at this stage to offer strong hints over the likely policy action at December's policy meeting. There were also no attempts to steamroller the ECB Council into policy action. The stated above comments will maintain expectations that the ECB is not planning to announce some form of bond-buying extension, although the details are still in discussion. In the meantime, reaction to the speech was limited as markets remained in a consolidation phase with EUR/USD finding support just below the 1.0600 level.
US consumer prices see the biggest increase in six months in October amid higher gasoline and rent costs. According to the US Department of Labor, the Consumer Price Index advanced 0.4% last month, following September's gain of 0.3%. On a yearly basis, consumer prices grew 1.6% in October, the largest annual increase since October 2014, up from the preceding month's 1.5%. Both readings came in line with analysts' expectations. Nevertheless, the so-called core CPI, which excludes prices for volatile items such as energy and food, rose 0.1% in the reported month, unchanged from September, while market analysts anticipated a slight increase to 0.2%. Year-over-year, core consumer prices fell to 2.1% in October, following the prior month's 2.2% gain. Higher inflation as well as the strong labor market are likely to encourage the Federal Reserve to raise its key interest rates at its next meeting in December. The Central bank increased its key overnight interest rate in December 2015 for the first time since the global financial crisis. The Labor Department said gasoline prices surged 7.0%, up from September's 5.8%, whereas food prices remained unchanged. Within components of the core CPI, rents rose 0.4%, while medical care costs were unchanged. The price of prescription drugs rose 0.2%.
Upcoming fundamentals: US Durable Goods Orders and FOMC Meeting Minutes
The EUR/USD currency pair is set to be influenced by various data releases during the next 24 hours. However, there are three times when the market participants should look at their screens. First of all, at 13:30 GMT the US Core Durable Goods Orders and US Unemployment Claims are set to be released. Secondly, at 19:00 GMT FOMC Meeting Minutes will be out, and those might even outweigh the rest of the events scheduled for the day. In addition, on early Thursday morning the Germans will also release information relevant enough to influence the markets. At 9:00 GMT the German Ifo Business Climate will be out, and will dictate the strength of the common European currency.
EUR/USD remains flat under 1.0630 level
Daily Chart: The common European currency remained flat on Wednesday morning against the Greenback. The currency pair did not even fluctuated, as it stayed below the resistance put up by the second monthly support level at 1.0632. Previously, on Tuesday the rate remained flat by moving only a few pips lower by the end of the session. However, the pair did experience volatility in the range from 1.0582 and 1.0658. Although, in accordance with most technicals, the rate is set to fall by the end of the day.Daily chart
Hourly chart: The hourly chart for the EUR/USD shows that the rate experienced high volatility during the hours from 15:00 to 17:00 GMT. The explanation for that is the fundamental data releases, which were much off from the aggregate analyst forecasts. Namely, it was the always ignored US Richmond Manufacturing Index, the European Consumer Confidence and the US Existing Home Sales, which showed initially the strength of the US, then the power of the Euro and then again positive US data.
Hourly chart
Bullish sentiment continues to dominate in the markets
SWFX traders remain bullish on the pair, as 56% of open positions were long on Wednesday. Meanwhile, trader set up orders remain as bearish as on Tuesday, as 62% of pending commands were to sell the Euro.
OANDA traders have increased their bullish outlook, as 65.86% of open EUR/USD positions were long on Wednesday, compared to 64.96% long positions on Tuesday. Additionally, SAXO Bank clients have increased their bullish outlook as well, as 56.05% open positions are long, compared to 55.66% during the previous trading session.