EUR/USD sets eyes on 23.6% Fibo

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Source: Dukascopy Bank SA
  • Pending orders are bullish in both 50 and 100-pip ranges
  • Long open positions rose from 44% to 46%
  • Strongest resistance is placed at 1.1409/66, interim supply at 1.1295
  • Short traders to aim at 1.1122/03 demand zone (100 and 200-day SMAs)
  • Economic events to watch in the next 24 hours: Euro zone Manufacturing PMI (Aug) and Unemployment Rate (Jul); German Unemployment Change/Unemployment Rate (Aug); US ISM Manufacturing PMI (Aug)

© Dukascopy Bank SA
The Kiwi tumbled against the Euro on Monday, amid a worse than expected ANZ business confidence indicator from New Zealand, which dropped to the six-year low. This fact adds to speculation the Reserve Bank of New Zealand will be forced to soften monetary policy further. In the meantime, EUR/CAD was down 0.6%, as the commodity-linked Canadian Dollar managed to strengthen due to recovering oil prices.

Consumer prices in the Euro zone continued to rise modestly in August, despite falling energy prices. Inflation in 19-country currency bloc held at 0.2% in the year to August, unchanged from the previous month. Core inflation, which excludes volatile food and energy prices, rose 1.0% in August, compared to the 1.0% increase seen a month before. The headline inflation has been in what the ECB calls the 'danger zone' - below 1% since October 2013. In Italy, consumer prices rebounded after a negative 0.1% in July to a 0.2% growth in August. In annual terms, cost of living in the Euro zone's third biggest economy climbed 0.2% in the reported period. The data came ahead of the European Central Bank policy meeting later this week, with some analysts believing that the central bank will eventually ramp up its asset-buying programme.

Meanwhile, German shoppers spent more money in July compared with the preceding month. Retail turnover in the Euro area's number one economy rose 1.4% in real terms on a monthly basis in July, up from s revised 1.0% drop a month earlier. When measured on an annual basis, the reading surged 3.3% in the reported month after the 5.2% growth in June. The German economy is expected to continue on a positive path and grow well in the second half of 2015, the German Bundesbank estimated.

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Upcoming fundamentals: Euro zone, US manufacturing activity to see no changes in August



The Purchasing Managers' indices for manufacturing industries in several Euro zone countries and the US are forecasted to stay broadly unchanged in August. At the moment the only country, which is showing contraction, is France. In the meantime, German unemployment rate has probably remained flat at 6.4% in August, while the total number of people out of work is projected is drop by 3,000 the same month.


EUR/USD sets eyes on 23.6% Fibo

Neither bulls nor bears managed to take control over the EUR/USD currency pair yesterday, as it was largely unchanged on a daily basis. On Tuesday, however, the common currency seems to be gaining value. In case testing of the new monthly pivot point (1.1262) turns to be successful, bulls are going to target the next interim resistance at 1.1295 represented by the 23.6% Fibonacci retracement of 2014-15 downtrend. The bullish scenario is also shared by the majority of daily technical indicators.

Daily chart
© Dukascopy Bank SA

EUR/USD has also confirmed a narrow channel down pattern in the one-hour chart, meaning that a continuous bullish correction is now more likely. However, major obstacles are still located above the spot price, namely the 23.6% Fibo at 1.1295 and 200-hour SMA at 1.1329.

Hourly chart
© Dukascopy Bank SA

SWFX sentiment remains bearish, pending orders skyrocket above 50%

EUR/USD's sentiment among SWFX market participants added two percentage points from yesterday, as the share of longs advanced from 44% to 46%. At the same time, pending orders in 100-pip range from the spot price surged as much as 11 percentage points in the past 24 hours, to reach the 61% mark.

The share of bullish positions at OANDA is 48.58% at the moment, while SAXO Bank market participants are remaining strongly pessimistic towards the common currency, with their portion of longs taking up only 37% of all open trades on Tuesday, September 1.













Spreads (avg,pip) / Trading volume / Volatility



Average forecast says EUR/USD will trade at 1.11 by November

Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between Aug 1 and Sep 1 expect, on average, to see the currency pair at 1.11 by the end of November. The majority of participants, namely 58% of them, believe the exchange rate will be below 1.12 in ninety days, with 42% alone seeing it below 1.08. Alongside, 22% of those surveyed reckon the price will trade in the range between 1.12 and 1.18 by the end of November of this year.

© Dukascopy Bank SA

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