EUR/USD picks up after China's trade data

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Source: Dukascopy Bank SA
  • Share of long pending orders in 100-pip range is 52%
  • Long and short open positions are distributed equally between market participants
  • Key resistance lies at 1.1295 (23.6% Fibo, weekly R1, recent highs)
  • Bears to push the price below several SMAs around 1.11
  • Economic events to watch in the next 24 hours: Euro zone GDP (Q2); US Labour Market Conditions Index (Aug) and Consumer Credit (Jul)

© Dukascopy Bank SA
EUR/CHF benefited the most in the beginning of this week on Monday, as this currency pair added 0.5% in the past 24 hours. The Swiss Franc lost ground after a report on Foreign Currency Reserves of the Swiss National Bank, which rose to a record-high of 540 billion francs in August, providing the explanation for recent weakness of the Swiss national currency. Apart from that, commodity-linked EUR/CAD and EUR/NZD crosses continued to grow amid falling oil prices worldwide. Meanwhile, the Yen declined 0.3% versus its pan-European peer, awaiting the update on Japan's second-quarter GDP and current account balance in July, even though both of them eventually came out slightly better than projected.

In September, investors and analysts around the Euroland become more sceptical over economic situation in the region, as the Sentix investor mood metric for the Euro zone revealed on Monday. The economic index posted a steep decline to 13.6 points from the 18.4 points in August, also missing the estimates of 16.2. After running sharply higher in late 2014, the Investor Confidence Index has been more or less flat this year, showing only slight decreases. Despite the recent drop in the measure to its lowest since February, that is still an impressive performance, considering the crisis in Greece and the turmoil in global stock markets last month after China announced the Yuan devaluation. The Sentix Index release also showed that the perception of the current situation remains stable, while economic expectations have cooled sharply. Concerning Europe's largest economy, an index tracking Germany fell to 20.6 from 25.7, while the expectations component collapsed to 4.4.

Meanwhile, another release of official data showed that the industrial production in Germany returned to growth in July. According to the latest report from the German Federal Statistical Office, industrial output in the Europe's powerhouse economy posted 0.7% growth in the seventh month of the year, after reporting a revised 0.9% decline in the preceding month. However, the number missed estimates of a 0.9% growth.

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Upcoming fundamentals: Eurostat to confirm Euro area's GDP growth at 0.3%



Revised gross domestic product data is due at 9:00 GMT on Tuesday, while markets are forecasting the economic growth to be affirmed at 0.3% on a quarterly basis and 1.2% on an annual basis. Meanwhile, the French trade deficit has probably deteriorated from 2.7 billion euros in June down to 3.2 billion euros in July.


EUR/USD probes 1.12 as bulls aim at 1.1260/95

EUR/USD is attempting to appreciate above the weekly PP/20-day SMA around 1.12, following weak Chinese trade balance data. All attention is now turning to the next resistance area above 1.1260, which starts from the monthly pivot point and continues up to the 23.6% Fibonacci retracement/weekly R1/Sep 2 high at 1.1295. These levels are safeguarding the next supply above 1.14 (May/Jun highs). A decline of the pair, however, may struggle again and is forecasted to be contained by a dense zone of moving averages at 1.1117/1.1082.

Daily chart
© Dukascopy Bank SA

In the one-hour chart the EUR/USD currency pair is currently hovering just below the 200-hour SMA at 1.1216. With daily technical studies being positive at the moment, bulls are capable of sending the exchange rate above this resistance in the next 24 hours.

Hourly chart
© Dukascopy Bank SA

SWFX sentiment neutral, pending orders improve further

EUR/USD's sentiment among SWFX market participants is neutral at the moment, as the share of longs lost one percentage point yesterday to reach the 50% mark. However, the portion of long pending orders in 100-pip range from the spot price added one additional percentage point during the previous trading session to grow from 51% to 52%.

Meanwhile, the share of bullish positions at OANDA amounts to 44% at the moment, but SAXO Bank market participants are more pessimistic with respect to the common currency, as their portion of longs takes up only 38% of all open trades in the morning on Tuesday.













Spreads (avg,pip) / Trading volume / Volatility



Average forecast says EUR/USD will trade at 1.12 by December

Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between Aug 8 and Sep 8 expect, on average, to see the currency pair at 1.12 by the end of November. The majority of participants, namely 54% of them, believe the exchange rate will be below this mark in ninety days, with 34% alone seeing it below 1.08. Alongside, 22% of those surveyed reckon the price will trade in the range between 1.12 and 1.18 by the end of November of this year.

© Dukascopy Bank SA

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