- Market sentiment keeps bearish stance in 55% of all cases
- Pending orders in 100-pip range returned back above 50%
- Trading between 1.13 and 1.14 implies a neutral outlook for EUR/USD
- Five out of eight daily technical studies are set to buy the single European currency vs US Dollar
- Economic events to watch in the next 24 hours: US Crude Oil Inventories (Oct 16); FOMC Member Powell Speaks
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The Euro zone's current account surplus narrowed in August following the decline in the preceding month, according to the European Central Bank. The current account balance showed a surplus of 17.7 billion euros in the reported month, compared with 25.6 billion euros in July. In September, the GDP data showed exports climbed 1.6% in the second quarter, while imports increased 1.0%. Economic output growth in the currency bloc was 0.4% on a quarterly basis, supported by strong household consumption, whereas businesses and governments remained reluctant to invest despite the ECB's QE programme.
Meanwhile, the German producer price index dropped 2.1% on year in September as decreasing oil prices coupled with sluggish demand added to pressure on producers. Measured on a monthly basis, German PPI dropped 0.4% in September, according to Destatis. Excluding energy costs, the gauge dropped by 0.6% compared with September 2014. At the same time German consumer inflation declined 0.2% on month in September as declining oil prices had a dramatic impact on the overall price level in the Euro zone's number one economy.
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Upcoming fundamentals: Majority of events to take place outside EU or US
Similar to Monday of this week, today we do not expect any important fundamental releases from both Europe and the US. The data on US crude oil inventories is due at 14:30 GMT, but this it will be the main driver for commodity markets, not the foreign exchange and particularly the Dollar. Meanwhile, a Federal Reserve Governor Jerome Powell is due to participate in a panel discussion at the US Treasury Market Conference in New York, which will begin at 17:30 GMT today.
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EUR/USD keeps trading in tight range
Attempts to grow were undertaken by the EUR/USD currency pair on Tuesday. However, the momentum used to be weak enough in order to resume testing the closest resistance at 1.1392/95 (weekly PP; monthly R1). Therefore, the pair remains in limbo between the mentioned supply and support at 1.13 (20-day SMA; weekly S1). Even though daily indicators continue pointing strongly upwards, our short term expectation is fairly neutral with respect to EUR/USD for the moment.Daily chart
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A yesterday's recovery initially managed to send EUR/USD above the 200-hour SMA, currently at 1.1371. However, the following bullish inability to fix gains above this line resulted in a drop back below it by the end of the trading session. This fact is there to support bears in the nearest future.
Hourly chart
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SWFX 100-pip pending orders swing between gains and losses; market sentiment stable
Among clients of OANDA and SAXO Bank, the sentiment remains largely negative towards the Euro. With 58% of OANDA open positions being bearish, the share of short trades at SAXO Bank stays even higher at 70% today.
Spreads (avg,pip) / Trading volume / Volatility
Community members forecast the Euro to grow against the US Dollar this week
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In a week time, the sentiment on this currency pair changed significantly, as now 60% of traders predict the Euro to gain in value. Meanwhile, the consensus forecast for this Friday, October 23 stands at 1.14.
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According to the Berkeley who supports the bullish move "the EUR/USD fell on Friday and retreated 0.35% to 1.1347 in late trade and ended the week 0.18% lower. On 19th October it is pulled back to 1.1305, but I think it will get back up to 1.1370-1.1450." However, Daytrader21 supposes that there is still no clear direction for EUR/USD.
Average forecast says EUR/USD will trade at 1.14 by January 2016
Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between Sep 21 and Oct 21 expect, on average, to see the currency pair around 1.14 by the end of January 2016. Though the majority of participants, namely 53% of them, believe the exchange rate will be generally below this mark in ninety days, with 33% alone seeing it below 1.10. Alongside, 26% 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