- SWFX market sentiment is 72% bearish
- 53% of pending orders in 100-pip range are to BUY
- 74% of pending commands are set to sell the Euro
- Upcoming events: Euro zone's Current Account, US Preliminary UoM Consumer Sentiment, FOMC Member Quarles to speak
The US Dollar was slightly weaker against the Euro in the wake of the country's real estate market data. The EUR/USD exchange rate added 6 pips to touch the intraday high of 1.2265.
Building permits were down 0.1% to a 1.30M units rate in December, adding to a total 4.7% rise to a rate of 1.26M units in 2017, the strongest level in ten years. The reports also revealed that the US homebuilding activity decreased more than anticipated by the end of 2017 to mark its largest drop in just a year, due to a steep fall in the single-family housing units construction. Housing starts dropped 8.2% to a seasonally adjusted yearly rate of 1.19M units, which is expected to be transitory amid solid demand for housing, driven by a strong labour market.
Minor data releases
Friday's trading session will start with the ECB's Current Account for December at 0900GMT. In addition, the University of Michigan is to publish its preliminary Consumer Sentiment at 1500GMT. The last fundamental event of the day is a speech by the Federal Reserve Governor Randal Quarles at the Banking Law Committee Meeting at 1715GMT.
EUR/USD supported by strong cluster
The Euro's movement during the previous session reveals the strengthening of the bearish The common European currency was driven by strong upside momentum on Thursday. As a result, it managed to breach a strong resistance area formed by the 55– and 100-hour SMAs and the monthly R2 circa 1.2235.Subsequently, the pair was stranded in a narrow range between the aforementioned cluster and the upper boundary of a descending channel. The support of the former was enough to breach the given pattern and leave the rate trading near 1.2258 by Friday morning.
Given that no major fundamentals are scheduled for this session, the southern barrier is expected to hold strong, thus sending the Euro for slight appreciation towards the weekly R1 at 1.2311. In case this mark is surpassed, the next notable resistance is the distant weekly R2 and the monthly R3 at 1.2420.
Hourly Chart
The Euro has remained stable against the US Dollar this week, thus fluctuating around the monthly R2. Given the strong support apparent on the hourly chart, it is likely that the pair ends this session with slight gains.
Meanwhile, in case the Euro continues to edge lower during the following week, this might confirm that the pair is to make a retracement from the 50.0% Fibo towards the 38.2% retracement line.
Daily Chart
Market sentiment is bearish
The bearish market sentiment has increased by one percentage point on Friday with 72% short positions.
In the meantime, the outlook for the two currencies against the rest of the traded financial instruments is the following: the Euro is 74% bearish and the US Dollar is 63% bullish.
OANDA traders are decreasingly bearish, as 62% of open positions are short (-3%). SAXO Bank clients are likewise bearish on the pair with 62% short positions (+2%).
Spreads (avg, pip) / Trading volume / Volatility