- SWFX market sentiment is 52% bearish
- Trader pending orders are 60% to sell
- Pair opened Wednesday's session at 1.0714
- Upcoming Events: EU Final CPI; US CPI; US Core CPI; US Capacity Utilization Rate; US Industrial Production; FOMC Member Kashkari Speaks; Fed Chair Yellen Speaks
German Business Sentiment rose to its highest level in seven months in January, though less than expected. The Centre for European Economic Research/ZEW reported on Thursday that its Economic Sentiment Indicator for Germany gained 2.8 points to 16.6 in the reported month, falling behind analysts' expectations of monthly improvement to 18.4. However, the latest score was the strongest since June, when the Indicator came in at 19.2 points. Furthermore, the Current Conditions Index increased from 63.5 to 77.3 points last month, while economists anticipated a slight rise to 65 points. That was the highest reading since July 2011. The Current Assessment Index advanced considerably, climbing 13.8 to 77.3 points. The Mannheim-based ZEW institute also reported the Euro zone's ZEW Economic Indicator, which tracks sentiment for the next six months, grew to 23.2 in January, compared to the preceding month's 18.1, whereas market analysts expected a sharper increase to 24.1. Meanwhile, the Euro zone's Current Condition Index gained 7.9 to - 0.4 in the reported month.
Earlier this week, Destatis released its better than expected report, which showed Germany's economy expanded 1.9% in 2016, while output climbed 0.4% and exports grew at the fastest pace in four years
Upcoming fundamental releases: A busy day for fundamentals
During Wednesday's trading session there will be a lot of fundamental events taking place that will affect the financial markets. First of all, at 10:00 GMT EU Final CPI and Final Core CPI are about to be released. However, more impact will be done by data releases and events in the US. US CPI and Core CPI will be published at 13:30 GMT. Afterwards, at 14:15 GMT the US Capacity Utilization Rate and US Industrial Production data will be released. In addition, it is the second day of the World Economic Forum. Moreover, important speeches are scheduled for today. At 16:00 GMT FOMC Member Kashkari is set to give a speech, and at 20:00 GMT chairwoman of the Federal Reserve, Janet Yellen is set to give a speech.
EUR/USD retreats on Wednesday
Daily Chart: The Euro declined on Wednesday morning against the US Dollar, and it could be clearly seen that the currency exchange rate is set to continue the decline. However, this comes after a 1.10% surge in the pair during Tuesday's trading session, which caused the rate's technicals to be reviewed. The common European currency has hit a combined resistance level of two trend lines at 1.0717 against the US Dollar, and as a result the pair is set to fall as low as 1.0625, where the 55-day SMA is located at.Daily chart
Hourly chart: The hourly chart reveals that during the surge on Tuesday the currency pair left behind all of the SMAs and bent the upper Bollinger band until it reached the upper trend line of a medium term channel. After making two attempts at the trend line the currency rate began the retreat, which has lasted into Wednesday. It can be clearly seen that the rate will not find a support level as low as 1.0650 also on the hourly chart, as near that level the 55 and 100-hour SMAs are located at.
Hourly chart
SWFX traders also shift to bearish side
SWFX traders have become bearish regarding the pair, as 52% of open positions are short on Wednesday. In addition, 60% of trader set up orders are to sell the Euro.
OANDA traders have become bearish, regarding the pair, as 51.22% of open EUR/USD positions were short on Tuesday. Meanwhile, SAXO bank traders increased their bearish outlook, as 60.62% of open positions were short, compared to 59.08% previously.