- 57% of positions are short
- There is still no real difference between the buy (48%) and the sell (52%) orders
- The immediate support is the 100-day SMA
- The falling trend-line and the monthly PP at 1.1150 continue to act as a ceiling
- Upcoming events: FOMC Statement, Pending Homes Sales, Crude Oil Inventories
US consumers mood darkened in July, as households were worried about current and future job growth, and rattled by events in China and Greece. The Conference Board reported that its index of consumer confidence dropped to 90.9 this month, hitting the lowest level since September. June's reading was revised to show 99.8, down from originally reported 101.4. The present situation index, an indicator of consumers' assessment of current economic situation, slid to 107.4, compared with a revised 110.3 in June, originally put at 111.6.
Consumer expectations for economic activity over the next six months plummeted to 79.9 from a revised 92.8, initially estimated at 94.6. The report showed that consumer were less optimistic about the labour market. Some 20.7% of consumers this month thought jobs are "plentiful," down from 21.3% in June. Another 26.7% described jobs as "hard to get" in July, up from 26.1% saying that in the prior month. The share of respondents anticipating more jobs in the next six months fell to 13.1% in July from 17.1% in June. The share expecting fewer jobs surged to 20.0% from 15.2%. Consumers' perceptions about the labour markets could play into the Fed assessment of the economy and interest rates. The US central bank started a two-day meeting on Tuesday and will release a policy statement later in the day.
Take precautions before 6 p.m. GMT
The US Dollar proved its resilience to the negative events by appreciating on the disappointing consumer sentiment yesterday. But this is more due to the fact that the market expects the Fed to reaffirm September rate hike, which has been the largest contributor to the strength of the Greenback lately. In case of any outcome, the volatility should be greatly elevated around 6 p.m. GMT, while Pending Homes Sales and Crude Oil Inventories that are to be published earlier are likely to have a limited effect on the exchange rate
EUR/USD to move away from 1.1150
Unless the Fed postpones a rate hike beyond September, the Euro is likely to start negating recent gains. The falling trend-line and the monthly PP at 1.1150 continue to act as a ceiling, and any attack on this level should be repelled. The immediate support is the 100-day SMA, and while this can underpin the rate for some time, EUR/USD could re-test July's low already next week. At the same time, a breach of 1.1150 will suggest an extension of a rally towards 1.13.Daily chart
A rebound on the hourly chart from the lower trend-line of the channel was not as strong as expected, and now we see a follow-up test of this support. This time however, the bears are likely to push through the demand at 1.1040 because of proximity to a major down-trend resistance. After EUR/USD reaches 1.10, the next target will be the 200-hour SMA at 1.0950.
Hourly chart
Bears continue to dominate
In the meantime, percentage of shorts at OANDA and SAXO Bank is larger. At the moment 61% of OANDA traders prefer to be bearish on the Euro, while SAXO Bank traders are even more confident in weakness of the common currency - 63% of them are short on EUR/USD.
Spreads (avg,pip) / Trading volume / Volatility
Community members expect Euro to weaken in the short run
Participants of the weekly poll among Dukascopy Community members have a strong negative bias towards EUR/USD. The average forecast lies between 1.06 and 1.05, although the most popular interval among the surveyed was 1.08-1.07 with more than 17% of the votes.
A proponent of a near-term rally, Tommaso, ponders that "the elusive parity between the Euro and the US Dollar could be the August-September target for the pair; but this "race" still requires a better position". He thinks "this "position" can be achieved during the July 26th - 31st week, with a correction at the 1.1000 level". One of his opponents, a community member with a nickname Csongor_George_Pal, expects the Fed to raise the federal funds rate to 0.35%, which in turn will negatively affect EUR/USD.
Judging by the average forecast, 1.1002, survey participants do not expect the Euro to move in either direction during the next three months. In reality, there are significantly more bears (57%) than bulls (43%) because the bears gave somewhat less extreme forecasts than the bulls. Meanwhile, the most popular answer, which collected 20% of all the votes, was a price interval between 1.04 and 1.02.