- SWFX market sentiment is 54% bearish
- 54% of pending orders in 100-pip range are set to SELL
- 50% of traders are bullish on the Dollar
- Upcoming Events: US Advance GDP q/q, Revised UoM Consumer Sentiment
According to Mario Draghi, the ECB decided to cut the asset purchase program to €30 billion/month but simultaneously extend it to another nine months. This decision led to collapse of the Euro against the Dollar. From technical perspective, this downfall market dominance of a large descending channel and dissolution of small ascending channel.
The Euro started to fall against the US Dollar, after the ECB made an interest rate announcement on Thursday. The EUR/USD currency pair lost 0.40% or 47 base points to confirm the decline at the 1.1765 mark and fall further given the dovish stance of the Bank. The European Central Bank held its key interest rate unchanged at 0.00%, as widely expected. The Bank also announced that it aims to start the exit from the QE program in a very cautious way, without seeing the strengthening of the Euro. Moreover, interest rate levels are unlikely to be moved until much later when the asset-buying program ends. As there was no the specific date mentioned, the rates could stay on hold at least for the year from now.
US GDP Update
At 12:30 GMT the Bureau of Economic Analysis will publish a second outlook on the US GDP growth rate, which is expected to slip to 2.6% due to series of devastating hurricanes that hit Caribbean, Mexico and southern part of America in the beginning of autumn.
EUR/USD sinks amid ECB meeting
The common European currency collapsed against the Dollar after the ECB President Draghi cut the size of asset purchases but prolonged the quantitative easing program for nine months. From technical point of view, this event signified a breakout from symmetrical triangle pattern. In other words, the pair bounced off from a combined resistance formed by the 55-day SMA and the upper trend-line of a dominant descending channel. During today's trading session bulls are likely to try to recover the Euro. However, these attempts are expected to fail, as the pair will need to cross the monthly S1 at 1.1658 and the weekly S2 at 1.1662. On chart this scenario even more unlikely, as the northern side there is additionally secured by the 100-day SMA.
Hourly Chart
As it was previously mentioned, the currency rate was fluctuating in the symmetrical triangle pattern that formed at intersection of two different channels. The ECB meeting became the trigger, which forced the pair to make a breakout. After announcement of the EU Min Bid Rate the pair tried to climb to the top, but after reaching a combined resistance set up by the 55-day SMA and the upper trend-line of the dominant descending channel was forced to start moving in the opposite direction. A release of update on the US GDP growth rate, in theory, might provide another impulse to drag the pair even lower to the bottom boundary of the channel. In the opposite scenario, the Euro has a chance to slightly recover and return near the 1.17 mark.
Daily Chart
Traders remain bearish
In result of the previous trading session the bearish market sentiment notably decreased, as 54% of open positions are short now. In the meantime, the outlook for the two currencies against the rest of the traded financial instruments is the following: the Euro is 62% bearish and the Dollar is 50% bullish.
Traders of OANDA remain bearish, as 60% (-3%) of open positions are short. Meanwhile, SAXO are also bearish on this currency pair with 51% (-10%) of open short positions.
Spreads (avg, pip) / Trading volume / Volatility