- SWFX market sentiment is 52% bullish
- Pending commands in the 100-pip range 64% short
- Pair opened Wednesday's session at the 1.1076 level
- Aggregate daily technical indicators bet EUR/USD will depreciate
- Economic events to watch over the next 24 hours: Fed's Dudley Speaks; US Trade Balance (May); Fed's Tarullo Speaks; US PMI Services (June); ISM Non-Manf. Composite (June); FOMC Minutes
An important indicator of the euro area's economic health stayed unchanged in June. The 19-country Markit Composite PMI, a forward-looking indicator tracking development in the euro area's manufacturing and services sectors, was unchanged at 53.1 points during the sixth month of the year, same as in May, when it rebounded from a 15-month trough. Meanwhile, conditions in the euro-zone services sector eased as the gauge tracking development in the area booked 52.8 points, down from 53.3 snatched in May. A level below 50.0 signals a deterioration from the previous month, while above 50.0 signals an increase. Among major euro area countries, France was once again the weakest performer, with PMIs pointing to a contraction in economic output. Indicators for Germany, Italy and Spain pointed to solid expansion. Data overall signaled a continued pick-up in employment, with job growth accelerating to a five-year high. Meanwhile, a separate report from Eurostat showed that retail sales in the euro zone came in the green both on the monthly and annual basis in May, after the flat reading seen a month before. Retail sales rose by 0.4% in May, after a 0.2% increase in April. This brought the annual rate of increase up from 1.4% to 1.6% in May.
The new orders for US manufactured goods declined 1.0% in May following a revised 1.8% advance during the previous month, being a slightly steeper decrease than the 0.8% consensus forecast. Moreover, there was a 1.9% drop on a yearly basis in total orders, while excluding transport there was a 3.4% annual loose. Meanwhile, there are some hints of a gradual expansion in conditions, but not enough to trigger a significant shift in sentiment towards the economy. Meanwhile, there was a recovery in energysector orders after the very steep drop occurred during the previous month, although total durable goods orders still went down 2.3% following a 3.2% gain the previous month. Although, there was a 1.6% annual rise in durable goods orders. Demand for mining and energy-related equipment slipped 5.8% after a 20.8% plunge in the prior month. Overall, the data suggests stabilisation in the industrial sector with an advance in unfilled orders and lower inventories likely to support production during the next few months. Nevertheless, the rate of improvement still is relatively limited.
Upcoming fundamentals: Fed speakers and various data releases
The EUR/USD pair on Wednesday will be affected by information and opinions coming from the United States. First of all the Fed's Dudley is set to speak at 12:00 GMT. Just in the middle of the day's speeches, the US Trade Balance for May will be released at 12:30 GMT. Second speaker of the day will be the Fed's Tarullo at 13:00 GMT. Next up the US PMI Services index for June will be published at 13:45 GMT. Afterwards, the ISM Non-Manf. Composite index for June is set to be released at 14:00 GMT. Last and the most important data will come from the FOMC Minutes at 18:00 GMT.
EUR/USD below 1.11 on Wednesday
Daily chart: The European stopped the past three session fluctuation around 1.11 level and dropped to 1.1073 on Tuesday against the US Dollar. As the drop happened, the pair went past the support cluster made up of the 200-day SMA and weekly PP at 1.1093 and 1.1092 respectively. At the moment, the currency exchange rate is trading at 1.1055 by 5:15 GMT, and it is moving towards the weekly S1 at 1.1015. If the pair drops through the next support level, it will go down to the next support cluster of 1.0893/69, where the weekly S2 and monthly S1 are located.Daily chart
Hourly chart: The hourly chart shows, that the Euro was struggling with the monthly pivot point at 1.1149 on Tuesday for seven hours against the US Dollar. As the currency exchange rate finally bounced off the resistance around 14:00 GMT, it fell below all SMAs, lower Bollinger Band and the weekly PP in just two hours. Since then then pair has been slowly declining, and it is in the middle on its way towards the weekly S1 at 1.1015.
Hourly chart
SWFX traders become bullish on Wednesday
OANDA trader bearish sentiment has decreased compared to Tuesday's 61.18%, as, at the moment, 59.39% of OANDA open positions are short. In addition, SAXO Bank clients have decreased their bearish stance, as their open short positions are now at 54.91% compared to 62.44% of last trading session.