- Market sentiment is slightly bearish (51%) in the morning on Wednesday
- 100-pip pending orders improved, bullish share rose to 52%
- 55-day SMA crossed 200-day SMA to the upside, sentiment improves
- Daily technical indicators are no longer bearish with respect to the Euro
- Economic events to watch in the next 24 hours: German Industrial Production (Aug), Trade Balance (Aug) and 10-y Bond Auction; French Trade Balance (Aug); ECB Non-Monetary Policy Meeting; US Crude Oil Inventories (Oct 2)
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Industrial orders in Germany unexpectedly dropped in August, fuelling fears that Europe's largest economy is being hit by slowing global growth. Orders, adjusted for seasonal swings and inflation, dropped 1.8% on a monthly basis in the given period, following a revised decrease of 2.2% in July. The reported number missed market expectations of a 0.5% increase in August. On a yearly basis, the gauge advanced 1.9% in the reported month, after posting a revised 1.3% fall in the previous month. At the same time, the market consensus projected an increase of 5.6% year-on-year in August.
The recent data enhances a picture of waning demand from abroad, especially China and other emerging markets. That suggests the strong German exports, which supported growth in the first half, could lose momentum. Meanwhile, August factory orders don't yet reflect the impact of Volkswagen's cheating on the US emissions tests revealed in September.
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Upcoming fundamentals: Both German exports and imports set to slump in August
Trade balance statistics for Germany will be out at 6:00 GMT on Thursday, and markets expect the same pace of a decline for both exports and imports, namely a 1.2% slowdown. At the same time, French foreign trade numbers will be released on Wednesday at 6:45 GMT and economists foresee the August deficit widening from 3.3 billion euros to 3.5 billion euros on a monthly basis. Among other events during the next 24 hours, the European Central Bank's Governing Council will hold a meeting today, but no decisions are planned to be made. Potential topics of discussion are likely to include a recent return of the Euro zone's inflation below zero and potential extension of the QE programme beyond September 2016.
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EUR/USD closed Tuesday trading above 1.1260
A long-awaited close above the 50% Fibonacci retracement of the Jul-Aug uptrend became a reality yesterday. While being underpinned by the 55-day SMA, currently at 1.1169, EUR/USD pierced through several crucial resistances to reach the 1.1270 mark by the end of Tuesday's trading session. However, a recovery remains sluggish, meaning that we should observe Wednesday's consolidation above 1.1260, in order to completely refocus our attention to the upside. In case of success the long traders will target both upper Bollinger band and 38.2% retracement at 1.1364/68.Daily chart
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As explained yesterday, a small decline of the Euro below the 200-hour SMA did not imply any significant bearish consequences for this currency pair. A revival above 1.1260 confirms the pair's bullish intentions, and we may see additional gains in the nearest future.
Hourly chart
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SWFX sentiment and pending orders swing around 50%
Meanwhile, bullish open positions at OANDA crashed by almost ten percentage points, down from 48.13% to less than 39%. SAXO Bank traders are still remaining largely pessimistic with respect to the common currency as their portion of the longs stays at just 33% (-3%) today.
Spreads (avg,pip) / Trading volume / Volatility
Community members forecast the Euro to grow against the US Dollar this week
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This week the number of bullish and bearish votes is almost equal, however, the bullish outlook obtained the majority (56%) of the votes. Meanwhile, the consensus forecast for this Friday, October 9 stands at 1.125.
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At the same time, RacerX retains bearish views with respect to EUR/USD as he suggests that "the pair appear to be in a range between 1.10800 and 1.14600 for the month of September. This will likely continue until there is more news on the Fed's intentions with regards to the expected rate hike. I think that this uncertainty has held investors back preventing the range to be broken, either way. Nonetheless, I think that mid-term trend is still to the downside. Should it break 1.10800 support, I believe the pair might gain further momentum to the downside."
Average forecast says EUR/USD will trade at 1.13 by January 2016
Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between Sep 7 and Oct 7 expect, on average, to see the currency pair around 1.13 by the end of January 2016. Though the majority of participants, namely 52% of them, believe the exchange rate will be generally below the 1.14 mark in ninety days, with 40% alone seeing it below 1.10. Alongside, only 24% of those surveyed reckon the price will trade in the range between 1.14 and 1.20 by the end of January. © Dukascopy Bank SA