- SWFX market sentiment is 61% bearish
- Trader pending orders 51% bearish
- Pair opened Tuesday's session at 1.1203
- Upcoming Events: German ZEW Economic Sentiment; US PPI
The common European currency is continuing to depreciate against the US Dollar in the previously established descending channel pattern. It is most likely that the decline will struggle with the passing of various support levels. However, the rate eventually will reach the trend line of a medium term ascending channel pattern.
As markets expected, the European Central Bank left its interest rates and monetary policy unchanged at its Thursday meeting; however, it signalled that further rate cuts were highly unlikely. Policymakers acknowledged that the 19- country currency bloc was performing strong economically but inflation remained growth remained subdued, forcing the Bank to keep rates and policy on hold. However, policymakers gave a balanced view on the Euro zone economy. Still, the ECB did not even consider an option of lowering its 2.3T euro asset purchases.
US PPI in focus
The only relevant event, which might influence the strength of the common European currency will be the German ZEW Economic Sentiment. The data will be published at 09:00 GMT. Meanwhile, from the US Dollar's side the currency pair will be affected by the release of the US PPI at 12:30 GMT. This data release will be covered by the Dukascopy research team on the live webinar.
EUR/USD continues in set pattern
The common European currency continued to trade against the US Dollar in the descending channel pattern, which formed as a result of the pair bouncing off the resistance of the long term pattern's upper trend line at the start of May. During the middle of Monday's trading session the currency exchange rate encountered the resistance of the upper trend line of the descending channel and the 100-hour SMA. As a result a decline began, which on Tuesday morning had reached the support of the 38.20% Fibonacci retracement level at the 1.1188 level. Due to the fact that the retracement level has been already pierced twice, it can be assumed that the support of the Fibo will be passed by the end of the day.
Hourly Chart
The daily chart reveals that instead of propelling the currency pair higher the 20-day SMA has joined in providing resistance the weekly PP. However, the currency exchange rate finds no difficulty to quite often bounce above the mentioned levels of resistance. This fact moves the hourly chart in favour for the analysis of this pair.
Daily Chart
Read More: Technical AnalysisBearish sentiment persists
SWFX traders are 61% short in regards to the pair on Tuesday. Meanwhile, 51% of set up orders are to sell the Euro.
OANDA trader sentiment remains largely bearish, as 69.73% of open positions are short. However, SAXO bank clients have decreased their short positions amount, as 62.51% of open positions are short, compared to 63.46% on Monday.
Spreads (avg, pip) / Trading volume / Volatility
Average forecast says EUR/USD will trade around 1.11 in September
Traders, who were questioned on their longer-term views on EUR/USD between May 13 and June 13 expect, on average, that the currency pair may trade slightly above 1.11 during the second week of September. In general, 49% (+1%) of participants believe the exchange rate will be above 1.12 in the following ninety days. Meanwhile, 45% (+2%) of respondents expect to see the rate below 1.10.