- SWFX market sentiment is 50% bullish
- 56% of pending orders in 100-pip range are set to SELL
- 52% of traders remain bullish on the Dollar
- Upcoming Events: US ISM Manufacturing PMI, FOMC Member Kaplan Speaks
The Catalan referendum on independence financial markets met with expected negative reaction, which led to 0.3% depreciation of the Euro against the Dollar. From technical perspective, this event signified termination of the surge and rebound from the upper edge of a recently formed descending channel. Because of the downside momentum, the pair is likely to continue to slip to the bottom at least until the 100% Fibonacci retracement level located at 1.1715.
The EUR/USD fell slightly in the wake of Thursday's data showing the US economy expanded at a stronger-than-expected pace in the June quarter. Following the report, the European single currency depreciated against the US Dollar by 13 base points or 0.11%, though its losses were offset initially. The pair continued a side move nearing the 1.1780 level.
The Commerce Department said that the US economic growth in the second quarter was the quickest in more than two years, with a 3.1% annual increase in the reported period. However, growth momentum is expected to be slowed owing to the impact of Hurricanes Irma and Harvey. Analysts suggested anticipated weakness would be softened by rising inventory investment in the Q3.
Price Manufacturing Index release
The only event that is likely to cause certain volatility in the markets apart from the yesterday's Catalan referendum is a release of the US Manufacturing PMI by the Institute for Supply Management at 14:00 GMT.
EUR/USD slips on Catalan referendum
In line with expectations, the currency exchange rate managed to break to the top, crossing the 100-hour SMA plus another resistance level near 1.1810. During the two-day surge the pair even formed a little ascending channel. But due to referendum on independence in Catalonia the Euro lost 0.3% against the Dollar and fell out of the channel. The fact that now the pair is located below a combination of the 55- and 100-hour SMAs, suggests that might continue to the move to the bottom. The downfall might be additionally spurred by the official comments from the EU, Catalan and Spanish governments through the day. However, this event is unlikely to change the general scenario, according to which the rate is expected to continue to climb to the top after bouncing off from the 100% Fibo at 1.1715.
Hourly Chart
The referendum on independence that took place in Catalonia yesterday neutralized the two day surge that started because of a rebound from the 100% Fibonacci retracement level at 1.1715. Now the rate is likely to make another attempt to break to the bottom. If a second rebound happens, that would confirm an existence of small double bottom formation.
Daily Chart
Traders become neutral
The bearish expectedly became neutral, as only 50% of open positions are short. In the meantime, the outlook for the two currencies against the rest of the traded financial instruments is the following: Euro is 55% bearish, while for the Dollar 52% bullish.
Traders of OANDA remain bearish, as 66% (+4%) of open positions are short. Meanwhile, SAXO are also bearish on this currency pair with 56% (0%) of open short positions.
Spreads (avg, pip) / Trading volume / Volatility