- Traders are bearish with 52% short positions
- 64% of pending orders in 100-pip range are to SELL the Euro
- Strong support cluster near 1.23
- Upcoming events: German Flash Manufacturing PMI and Flash Services PMI, Euro zone's Flash Manufacturing PMI and Flash Services PMI, German Ifo Business Climate, US Unemployment Claims
The Euro strengthened against the Greenback, following the release of the EU trade balance report. The EUR/USD currency pair gained 14 base points, or 0.11%, reaching the 1.2295 level, to continue fluctuating and reaching the intraday's high around the 1.2325 area.
The Eurostat revealed on Monday that the EU trade balance data did not meet expectations, showing the trade surplus of 19.9B in January, following the downwardly revised 23.2B in the prior month. Even though the data came out less-than-expected, it was positive and it positively impacted the growth of EUR/USD currency pair. Moreover, interesting initial reactions on main pairs can be seen, where EUR/GBP stood out with a 0.20% downturn, caused by recent Brexit agreements.
Releases of medium importance
IHS Markit is set to release the Flash Manufacturing PMI and Flash Services PMI for Germany and the Euro zone at 0830GMT and 0900GMT, respectively. The German Ifo Business Climate is likewise published at 0900GMT.
The only noteworthy fundamental event from the United States in this session is the weekly Unemployment Claims to be released at 1230GMT.
EUR/USD likely to go for correction south
The Euro spent most of Wednesday in a positive note, thus approaching the combined resistance of the 55– and 100-hour SMAs at 1.23. Strong upside risks started to prevail in the market late in the evening when the FOMC announced a 0.25% increase in its benchmark rate.Volatility was introduced in both directions; however, Euro bulls eventually took the dominant hand in response to a decrease in rate hike projections. The pair shot up 48 pips in one hour and subsequently reached a one-week high of 1.2370.
It is expected that the given upward momentum allays in this session, thus allowing for a minor decline. This likely fall should not exceed 1.23, as this level is supported by the 55– and 100-hour SMAs. In the meantime, gains should be capped near 1.2450.
Hourly Chart
The common European currency continued to depreciate against the US Dollar in a rather flat movement south during the past week. The pair had breached the 55-day SMA on Tuesday, but the strong upside momentum caused by the FOMC policy statement yesterday pushed the rate back above this line.
It is expected that the pair breaches the senior channel during the following week. The 50.00% Fibonacci retracement is likewise located nearby. This bearish scenario is supported by technical indicators on the daily time-frame.
However, the 55-day SMA might provide some support for a few sessions, thus leaving the rate stable during this time.
Daily Chart
Sentiment strongly bearish
The number of short positions of EUR/USD remains at 52% in this session.
The outlook for the two currencies against the rest of the traded financial instruments is as follows: the Euro is 59% bearish and the US Dollar is 52% bullish.
The bearish sentiment of OANDA traders is standing at 59% short positions today (+3%). Saxo Bank clients share the same sentiment with 58% short positions (-1%).
Spreads (avg, pip) / Trading volume / Volatility