- SWFX market sentiment is 56% bearish
- Trader pending orders are 64% to sell
- Pair opened Thursday's session at 1.0733
- Upcoming Events: US Building Permits; US Philly Fed Manufacturing Index; US Unemployment Claims; US Housing Starts
As analysts expected, the US Federal Reserve raised interest rates at its March monetary policy meeting on Wednesday amid rising inflation, solid economic growth and the strong labour market. The Central bank lifted its overnight interest rate by 25 basis points to a range of 0.75% to 1.00%. This was the necessary step to get the Bank's monetary policy back to a normal footing. The Fed Chair Janet Yellen said in a statement that the economy performed strong over the last couple of months, in line with policymakers' forecasts.
The Fed also confirmed its intention to raise rates at least two more times this year, if the economy remains on the track. Fed officials noted that inflation was close to the Bank's target of 2% and corporate investment rebounded after a few months of weakness. Analysts suggest that interest rates are unlikely to return to a neutral level until the end of 2019. Moreover, some analysts see a faster pace of increases in 2017. Earlier on the day, the Bureau of Labour Statistics reported consumer prices rose 0.1% last month, following January's gains of 0.6% and surpassing analysts' expectations for a 0.0% reading. Meanwhile, core inflation advanced 0.2%, slightly down from a 0.3% climb seen in January but in line with forecasts. Other data released showed retail sales and core retail sales rose 0.1% and 0.2%, respectively
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Upcoming events: US data package
On Thursday, at 12:30 GMT, a US macroeconomic data package will be released. However, none of the data is likely to cause a large enough impact to be noticeable. The package will consist of the US Building Permits, Philly Fed Manufacturing Index, US Unemployment Claims and the US Housing Starts. These data releases will not be covered by the Dukascopy research team this week.
Read More: Fundamental Analysis
EUR/USD trades below 1.0750 mark
Daily Chart: During the early hours of Thursday's trading session the common European currency was consolidating against the US Dollar, as the rate moved slightly lower. First of all it has to be noted that the pair jumped on the Federal Reserve rate announcement, breaking a strong resistance cluster, which kept the pair lower previously. The jump stopped at the weekly R1, which is located at the 1.0740 level. In face of this resistance the pair bounced off and began to consolidation. It is most likely that the rate will fall throughout the day before setting a new course in the near future.Daily chart
© Dukascopy Bank SA
Hourly chart: The hourly chart shows that the jump was highly volatile and lasted for three hours. Since then the pair has made two attempts to break through the weekly R1. However, it can be seen that the pair is moving lower. It is likely that the pair will be hindered by the 20-hour SMA at 1.0703 and a combination of the 55 and 100-hour SMAs respectively at 1.0655 and 1.0658.
Hourly chart
© Dukascopy Bank SA
Read More: Technical Analysis
Markets remain bearish
SWFX traders are bearish on the pair, as 56% of open positions are short on Thursday. Meanwhile, 64% of trader set up orders are to sell the Euro.
OANDA traders are clearly bearish, as 56.44% of trader open positions are short on Thursday, compared to 51.17% positions previously. In addition, SAXO bank clients are also on the bearish side, as 59.33% of open positions are short, compared to 52.56% on Wednesday.
Spreads (avg,pip) / Trading volume / Volatility
Average forecast says EUR/USD will trade around 1.06 in April
Traders, who were questioned on their longer-term views on EUR/USD between February 16 and March 16 expect, on average, the currency pair to trade around 1.06 by the start of April. In general, 54% (-2%) of participants believe the exchange rate will be generally above 1.06 in ninety days, and 15% (+1%) see it above 1.12. In the meantime, 20% of those surveyed reckon the pair will be at parity or below. © Dukascopy Bank SA