- Pending orders held by bulls retreated from 62% to 56%
- Long open positions slumped from 51% to 49%
- Bulls to focus on Jun high at 1.1437 in the medium term
- Short traders will try to prevent a rise of pair above 23.6% Fibonacci retracement at 1.1294
- Economic events to watch in the next 72 hours: French, German and Euro zone Manufacturing/Services PMI (Aug), US Manufacturing PMI (Aug)
Greece repaid 3.4 billion euros to the European Central Bank on Thursday, as Euro zone finance ministers disbursed 13 billion euros to the Greek government and set aside another 10 billion euros to recapitalize the Greek cash-deprived banks. Jeroen Dijsselbloem, the Dutch finance minister who heads the Eurogroup, said the reform-for-aid deal formally approved on Wednesday would hopefully provide Greece with a new lease on life. At the same time, Daniele Nouy, the head of the ECB's banking supervisory arm, was confident that Greek banks will recover when the crisis is over, as they were relatively strong before turmoil started. Meanwhile, the Greek Prime Minister Alexis Tsipras announced he had resigned, sparking another political drama in the country. Greece now heads for its fourth parliamentary election since 2012, which is reported to take place on September 20.
At the same time, Ewald Nowotny, ECB Governing Council member, said that the central bank's asset purchase programme aimed to underpin the Euro region's economy will not end early. Nowotny underlined that inflation in the currency bloc remained much below the target, with the central bank unlikely to meet the inflation goal soon. On top of that, the most recent devaluation of the Yuan may hurt the world economy, Nowotny added. Nevertheless, he ruled out the possibility of currency wars among countries as one of the tools to increase competitiveness of exports.
Upcoming fundamentals: European/US PMIs to remain uplifted despite China's miss
On Friday the biggest countries of the Euro zone and the US are releasing their PMI indicators for both manufacturing and services industries. Among them, activity in French production sector will probably remain the only one with the PMI reading below 50 points in August, even though a rebound from 49.6 to 49.8 points is still expected. The data stream will start at 7:00 GMT with French numbers, followed by German statistics at 7:30 GMT and pan-European figures at 8:00 GMT. The US will announce its manufacturing PMI at 13:45 GMT.
EUR/USD surges 180 pips, approaches 1.13
Bearish US Dollar sentiment after dovish FOMC meeting minutes continued have strong impact on the EUR/USD currency pair on Thursday and in the early trading on Friday. In the past 36 hours the pair climbed around 180 pips and is now nearing the 23.6% Fibonacci retracement and the 1.13 mark. Therefore, the Euro has already surpassed the Jul high. Outlook turns to be quite positive at the moment, while the key target for bulls seems to be the Jun high at 1.1437, which is followed by the May high at 1.1466. Daily technical indicators are also supporting the bullish scenario.Daily chart
In the meantime, in the one-hour chart the currency pair has just escaped the bearish channel it has traded in since Aug 12. By penetrating a number of crucial resistances bulls have better prospects to prolong the European currency's recovery beyond 1.13 in the short term.
Hourly chart
SWFX sentiment is bearish again, pending orders stay positive
Meanwhile, bullish positions at OANDA account for just 33.43% (-5%) at the moment, while SAXO Bank market participants are also remaining strongly pessimistic towards the common currency, as the share of longs takes up just 26% on Friday.
Spreads (avg,pip) / Trading volume / Volatility
Community members expect Euro to strengthen by the end of the week
Traders see the pair to growing by Friday of this week, as the median forecast of Community members for the pair's close price on August 21 is 1.115. According to Fundamental Analysis Contest, majority of respondents believe that the upcoming data will have a bullish impact on the Euro vs US Dollar.
A proponent of a near-term growth, Khimitau, suggests that "the pair runs on a range consolidation between 1.0808 and 1.2220. After six days of bullish market and two days of bearish one I am expecting some support around 1.08."