- SWFX market sentiment is 63% bearish
- Trader set up pending orders are 54% short
- Pair opened Tuesday's session at the 1.1320 level
- Aggregate daily technical indicators bet EUR/USD will surge
- Economic events to watch over the next 24 hours: French Flash PMI Manufacturing (Aug); French Flash PMI Services (Aug); French PMI Composite (Aug); German Flash PMI Manufacturing (Aug); German Flash PMI Services (Aug); German PMI Composite (Aug); EU Flash PMI Manufacturing (Aug); EU Flash PMI Services (Aug); EU PMI Composite (Aug); US New Home Sales (July); US PMI Manufacturing (Aug)
German producer prices grew faster than expected last month, official data revealed on Friday. According to the German Federal Statistics Office (Destatis), the Producer Price Index (PPI) rose 0.2% month-over-month a non-seasonally adjusted basis in July, compared to the 0.4% hike see in the previous month, whereas market analysts anticipated the indicator to come in at 0.1% in the reported month. On an annual basis, producer prices dropped 2.0% in the seventh month of the year, following June's 2.2% fall, while economic desks expected the PPI to fall 2.1% year-over-year in July. In the meantime, energy prices fell 6.2%, whereas durable consumer goods jumped 1.2% and intermediate consumer goods slipped 1.8% in the same month. The data provided evidence that the Euro zone's largest economy recovered slightly from the deflationary pressure. Nevertheless, analysts remain cautions, arguing that there is a strong deflationary pressure coming from the latest sharp increase in the value of the Euro against the British Pound, driven by Britain's decision to leave the European Union. In contrast with the Consumer Price Index (CPI), the PPI measures prices changes at the manufacturing and wholesale level and looks at three areas of production: industry-based, commodity-based and commodity-based final demand-intermediate demand.
Consumer prices in the Euro zone rose slightly on an annual basis in July, official data showed on Thursday. According to final estimates from Eurostat, the Consumer Price Index (CPI) in the region grew 0.2% year-over-year on a non-seasonally adjusted basis last month, up from the 0.1% hike seen in the preceding month and in line with analysts' expectations. On a monthly basis, consumer prices in the 19-nation currency bloc fell 0.6% in July, following the previous month's 0.2% gain and falling behind the 0.4% drop forecast. Meanwhile, so-called core inflation, excluding alcohol, tobacco, food and energy, jumped 0.9% on a yearly basis in the same month, unchanged from last month's reading and in line with market expectations. Energy prices fell 6.7% on an annual basis and 1.0% on a monthly basis, whereas prices for services, the largest component of the bloc's economy, increased 1.2% year-over-year. Back in June, the annual rate of inflation in the Euro zone rose 0.1% for the first time since January. In December 2015, the Euro zone fell into deflation for the first time since October 2009, forcing the European Central Bank (ECB) to launch its massive quantitative easing programme. The main objective of the central bank's monetary policy is to reach price stability across the region. The ECB strives for an inflation rate of below, but close to, 2% over the medium term. June
Upcoming fundamentals: PMIs from Europe and some US Data
Traders have to wake up early on Tuesday, as beginning at 7:00 GMT PMI data will start flowing in from the EU. The PMI data will consist of three indicators for each country for August, which are the Flash PMI Manufacturing, Flash PMI Services and PMI Composite. First three will be released by the French at 7:00 GMT. Afterwards, the Germans are set to announce their data at 7:30 GMT. Last but not least from the notable indicators will be the common PMI's for the EU at 8:00 GMT. Later in the day US PMI Manufacturing index for August will be released at 13:45 GMT. Moreover, it will be followed by the more important US New Home Sales for July at 14:00 GMT.
EUR/USD struggles below 1.1350 on Tuesday
Daily chart: The Euro once more approaches the resistance put up by the monthly R2 at 1.1353 against the US Dollar, as the currency rate found support on Monday in the combined support cluster made up of the lower trend line and the weekly pivot point at 1.1281 and the monthly R1 at 1.1263. By 5:00 GMT the currency rate was at 1.1336, and it was surely set to surge at least up to the monthly R2. In addition, daily aggregate technical indicators support a surge during today's trading session. Moreover, the pair is close to being overbought, as the number of open long positions decreases.Daily chart
Hourly chart: The hourly chart for EUR/USD pair shows a steady surge for the pair in the past 24 hours with some minor exceptions. As the rate rebounded against the weekly PP at 1.1201 at 8:00 GMT, the pair jumped to the resistance put up by the 20 and 200-hour SMAs, which hindered the surge for two hours. Afterwards, the rate began a surge at 11:00 GMT, which lasted up to 15:00 GMT, when the currency exchange rate reached the 55-hour SMA at 1.1319. The 55-hour SMA managed to stall the rise of the Euro against the Greenback until 0:00 GMT, when the rate continued to surge, which it has been doing in the past hours, as it approaches the upper Bollinger band at 1.1344 and the monthly R2 at 1.1353.
Hourly chart
Trader sentiment unchanged on Tuesday
OANDA trader bearish sentiment has decreased compared to Monday's 66.70%, as, at the moment, 62.94% of OANDA open positions are short. In the meantime, SAXO Bank clients have increased their bearish stance, as their open short positions are now at 69.99% compared to 68.27% of last trading session.