- Traders are bearish with 58% short positions
- 54% of pending orders in 100-pip range are to SELL the Euro
- Significant support near 1.2340
- Upcoming events: US (Core) Retail Sales m/m, US (Core) PPI m/m
The Greenback weakened against the single European currency, following the release of US consumer price index data. The EUR/USD currency pair soared 25 base points, or 0.20%, reaching the intraday's high of 1.2367.
The Bureau of Labour Statistics revealed on Tuesday that February consumer price index hit the forecasts, rising at a 0.2% pace, following the 0.5% up-move recorded in the previous month. The US Labour Department raised concerns that inflation is likely to accelerate, and, as a result, the Fed could hike interest rates faster than anticipated. Investors are carefully watching the situation in the market and looking for clues on how quickly the rates could be raised.
US fundamentals in focus
The main focus in this session will be put on the US Retail Sales and the Price Producer Index for January to be released together with core data at 1230GMT.
The Census Bureau projects a 0.4% increase in the Core Retail Sales and a 0.3% rise in Retail Sales, compared to 0.0% and -0.3%, respectively, during the previous month. Meanwhile, the Producer Price Index is expected to have gained 0.1% in February.
EUR/USD remains bullish
The first part of Tuesday's trading session was uneventful, as the Euro was fluctuating in a narrow range against the US Dollar. The market sentiment changed notably mid-session when the US published its CPI. The data matched expectations, thus alleviating the risk of Fed hiking interest rates at a faster pace.The US Dollar lost some ground against the Euro following this report, as well as responding to events involving the US Secretary of State. As a result, the Greenback fell 0.60% within a couple of hours.
Analysts expect that the pair's rally could continue during the following sessions up to the medium-term channel circa 1.2450. However, given the massive surge yesterday, bulls are likely to exhaust their positions for a couple of hours or even longer, thus allowing for a correction closer to the 1.2450 mark.
Hourly Chart
The Euro retraced from the breached channel last week and has since edged slightly lower. It is likely that the pair continues its medium-term down-trend and approaches the bottom boundary of the senior channel circa 1.22 during the following trading sessions.
Daily Chart
Traders are bearish
The number of short positions of EUR/USD is 58% in this session.
The outlook for the two currencies against the rest of the traded financial instruments is as follows: the Euro is 64% bearish and the US Dollar is 56% bullish.
The bearish sentiment of OANDA traders is standing at 60% short positions today (remains unchanged). In addition, Saxo Bank clients hold 62% short positions (+1%).
Spreads (avg, pip) / Trading volume / Volatility