- SWFX market sentiment is 56% bearish
- 54% of pending orders in 100-pip range are set to SELL
- 51% of traders are bullish on the Dollar
- Upcoming Events: US CPI, Retail Sales, Empire State Manufacturing Index and Crude Oil Inventories
In result of an impulse provided by the positive German GDP data release, bulls took the lead and increased value of the Euro against the Dollar by more than 1.5%. Until the American data release in second half of the day this surge is expected to continue. But further movement of the pair will depend on markets' perception of the US macroeconomic figures.
The Euro jumped against the US Dollar on surprisingly strong German GDP data. However, the trend was reversed as the next data showed 0.6% growth pace in the EU. The EUR/USD currency pair added 21 base points or 0.18% to appreciate further to the 1.1720 mark.
Destatis reported that German economy expanded at a better-than-anticipated pace of 0.8% in the third quarter, fuelled by higher capital investment and exports. The Euro zone's GDP growth was stable at 0.6%, pointing to smaller differences in growth figures between the member states. In this regard, the 19-country monetary region is expected to grow at the strongest pace in a decade this year, which would bolster the case for the ECB to start monetary policy tighthening.
US inflation data
There is one key event scheduled for today that is expected to cause notable volatility in the markets. At 13:30 GMT the Bureau of Labor Statistics will publish an update on the US inflation and retail sales data. This event will be covered by the Dukascopy Research Team.
EUR/USD breaks from three-month channel amid strong German data
Due to release of much better than expected German GDP data the currency exchange rate not only left the junior rising wedge formation but also managed to break through the upper resistance line of a three-month long dominant descending channel. Generally, the pair is expected to spend some time moving horizontally and then make a turnaround, as the further path to the north is obstructed by combined resistance formed by the 50% Fibonacci retracement level, the monthly R1 and the weekly R3. This assumption is also supported on daily timeframe, as an area near the 1.1796 mark contains the 50-day SMA. However, the surge might continue if release of the American inflation and retail sales data will not justify expectations.
Hourly Chart
On hourly chart the exchange rate not only broke the dominant descending channel that started to form in beginning of autumn but also the 55-day SMAs as well as a combined resistance set up by the monthly R1 and the 50% Fibonacci retracement level. Such bullish pressure suggests that the next resistance barrier will not sustain as well. However, whether the pair will continue the surge or make a turnaround will heavily depend on release of the US inflation data.
Daily Chart
Traders stay neutrally bearish
In result of the previous trading session the bearish market sentiment slightly increased, as 56% 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 63% bearish and the Dollar is 51% bullish.
Traders of OANDA remain bearish, as 64% (+1%) of open positions are short. Meanwhile, SAXO are neutrally bearish on this currency pair with 60% (+2%) of open short positions.
Spreads (avg, pip) / Trading volume / Volatility