- Share of long pending orders in 100-pip range is broadly stable at 57% (58% yesterday)
- Market sentiment remains slightly bearish (53%) for a third consecutive day
- Nearest resistance lies at 1.1437 (Jun high)
- Closest support is placed 100 pips below the spot price
- Economic events to watch in the next 24 hours: Euro zone Current Account (Jul); Greek Parliament Election
In the meantime, the common European currency has also traded upwards versus other majors on Thursday. The biggest rise was in turn posted against the Aussie and Loonie by 1.15% and 1.04%, respectively. EUR/CHF, however, added just 0.11% despite an important Swiss event, namely the rate decision of the Swiss National Bank.
Among recent European fundamentals, the Euro zone inflation unexpectedly eased in August, reinforcing the view the European Central Bank will expand its bond-buying programme to deal with economic risks associated with weak prices. The annual rate of inflation fell to 0.1% in August from 0.2% July. Meanwhile, the core measure, which strips out alcohol, tobacco, food and energy, climbed 0.9% in the reported month, after the 1.0% increase seen in July. On a monthly basis, consumer prices in the 19-country bloc posted zero growth, recovering from the 0.6% decline seen previously.
Lower oil prices prompted the ECB earlier in September to revise downwards its inflation outlook. The central bank predicted a gradual increase in inflation to 1.7% in 2017 from 0.1% this year. The ECB has already indicated that it is prepared to expand its bond-buying program beyond September 2016. Such a move could become necessary if inflation does not return to the ECB's medium-term target. Meanwhile, the Organization for Economic Cooperation and Development raised its 2015 economic growth forecast for the Euro zone by 0.1 percentage point to 1.6%, but cut its 2016 forecast to 1.9% from 2.1% in June.
Upcoming fundamentals: Greeks to elect new parliament as opinions are divided
In terms of fundamentals the next three calendar days are expected to be silent. On the other hand, from the political point of view the period is going to bring some major news. On Sunday the Greek Parliamentary election is going to take place, while voters seem to be divided in their opinions. Polls show that there are fairly equal chances for the former Prime Minister Alexis Tsipras's Syriza Party and opposition New Democracy party to gain the largest share of vote. Meanwhile, the winning party receives a 50-seat premium in the new parliament.
EUR/USD consolidates above 1.14 after Fed
After the Fed decided to keep interest rates on hold, EUR/USD skyrocketed up to the 1.14 level where it consolidated by the end of yesterday. Meanwhile, the pair was mainly stopped from rising further by the Jun high at 1.1437. With Friday estimated to be tranquil in terms of volatility, our outlook is quite neutral with respect to the pair. This view will be unchanged as long as the pair keeps trading below Jun/May highs' area of 1.1447/66. A risk of correction is therefore remaining in place for the time being.Daily chart
In the one-hour chart the EUR/USD's prospects are more positive as the exchange rate moved further away from the 200-hour SMA, currently at 1.1269. However, any bearish correction mentioned earlier may put the moving average at risk of being penetrated in the mid-term.
Hourly chart
SWFX sentiment flat since Tuesday
Meanwhile, the total number of bullish positions at OANDA amounts to 42.42% at the moment, while SAXO Bank market participants are even more pessimistic with respect to the common currency as their portion of the longs takes up only 35% (+2%) of all open trades.
Spreads (avg,pip) / Trading volume / Volatility
Community members forecast the Euro to rally against the US Dollar this week
As volatility in the equity markets remains uplifted, traders are moving away from the Greenback as Fed meeting approaches. As a result, the advantage of bullish votes increased even more over the past five trading days, up from 53% to almost 63%. Market participants also see the pair higher by Friday of this week, with the mean forecast being placed at 1.127.
Among traders, Jignesh claims that "this week's main risky event is the Fed rate statement. The expectation is for a sell-off in the USD as the Fed is unlikely to raise rates, based on the current inflation outlook. Resistance comes in at previous highs around 1.16 - 1.17, which is a likely place for the pair to revert."