- Share of long pending orders narrows minority to minimum (49%)
- Market sentiment improved considerably in the past 24 hours
- Pair is approaching a strong support zone at 1.1090/75
- Decline below 1.1016 (Aug 19 low) may provoke additional slowdown
- Economic events to watch in the next 24 hours: French GDP (Q2) and Manufacturing/Services PMI (Sep); German Manufacturing/Services PMI (Sep); Euro zone Manufacturing/Services (Sep); US Manufacturing PMI (Sep) and Crude Oil Inventories (Sep 18); ECB President Draghi Speaks
German factory gate prices contracted for a 25th consecutive month in August on an annualised basis, falling more than market's expectations. According to Destatis, the headline annual PPI in Germany was a negative 1.7% in the reported month, following the 1.3% drop posted in July and missing the estimate of 1.6% decline. On a monthly basis, the gauge fell 0.5% in August after a flat print in the prior month. The reading was predicted to show a negative 0.3% result. Concerning the product categories, in August energy prices decreased by 5.0%, prices of non-durable consumer goods and intermediate goods contracted by more than 1% annually. In contrast, prices of capital goods rose by 0.8% and prices of durable consumer goods climbed by 1.4%. The weak figures from Germany's economic powerhouse only underscore the fragility of economic recovery in the Euro zone.
In the meantime, the Bundesbank said in its Monday's report that undeterred by global uncertainties and economic slowdown in China, German growth is expected to continue in the second half of the year on rising domestic consumption and growing exports. The Buba expects the German economy to expand by 1.7% in 2015, while Berlin predicts that GDP will rise 1.8% this year.
Upcoming fundamentals: Euro zone PMIs, Draghi's speech expected on Wednesday
Today we are going to hear from the President of the European Central Bank Mario Draghi, who is due to testify before the European Parliament's Economic and Monetary Committee in Brussels at 13:00 GMT. Meanwhile, several countries of the Euro area will release their September PMI indicators for both manufacturing and services industries. While economists see a slowdown for German (7:30 GMT) and Euro zone (8:00 GMT) readings, French numbers (7:00 GMT) are projected to improve slightly in September.
EUR/USD slumps for a third consecutive day
EUR/USD failed at the nearest support yesterday, plunging below the 1.1154/39 area. Consolidation below 100/55-day SMAs and 61.8% Fibonacci retracement of the Jul-Aug uptrend allows further losses down to the 200-day SMA/weekly S2 at 1.1080/75. Meanwhile, the latter mark is strengthened by Sep 3 low, which may encourage bulls for a recovery. On the other hand, a slide below 1.1075 may cause additional drop down to May/Jul lows (1.0818/08) in the medium term. Daily technical indicators are in turn giving mixed aggregate signal at the moment.Daily chart
EUR/USD's inability to stay above the 61.8% retracement and the pair's further move away from the 200-hour SMA, currently at 1.1285, is pushing our expectations substantially to the downside. Losses can be contained by the 1.1090 mark, where current month's lows are placed at the moment.
Hourly chart
Bulls move into green territory amid EUR/USD's decline
Meanwhile, the total number of bullish positions at OANDA climbed further to 49.53% yesterday, while SAXO Bank traders are still remaining largely pessimistic with respect to the common currency as their portion of the longs takes up only 39% of all open trades.
Spreads (avg,pip) / Trading volume / Volatility
Community members forecast the Euro to grow against the US Dollar this week
On a weekly basis, the sentiment among Dukascopy Community members on this currency pair remains the same, as still only 42% of traders predict the Euro to decline.
Among traders, csan86 says that "this pair is still moving in a descending triangle. It tried to break out from this pattern on Thursday, but the price was changed by the 1.1450 resistance level again." He suggests that "this pair is still bullish" and he expects "an another breakout attempt this week."