- Market sentiment keeps bearish stance in 55% of all cases
- Pending orders in 100-pip range are 56% bullish
- Trading between 1.13 and 1.14 implies a neutral outlook for EUR/USD
- Five out of eight daily technical studies are set to buy the single European currency vs US Dollar
- Economic events to watch in the next 24 hours: French Business Climate (Oct); Spanish Unemployment (Q3); Italian Trade Balance (Sep); ECB Interest Rate Decision and Press Conference; US Existing Home Sales (Sep), Unemployment Claims (Oct 16) and Housing Price Index (Aug)
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The Euro zone's current account surplus narrowed in August following the decline in the preceding month, according to the European Central Bank. The current account balance showed a surplus of 17.7 billion euros in the reported month, compared with 25.6 billion euros in July. In September, the GDP data showed exports climbed 1.6% in the second quarter, while imports increased 1.0%. Economic output growth in the currency bloc was 0.4% on a quarterly basis, supported by strong household consumption, whereas businesses and governments remained reluctant to invest despite the ECB's QE programme.
Meanwhile, the German producer price index dropped 2.1% on year in September as decreasing oil prices coupled with sluggish demand added to pressure on producers. Measured on a monthly basis, German PPI dropped 0.4% in September, according to Destatis. Excluding energy costs, the gauge dropped by 0.6% compared with September 2014. At the same time German consumer inflation declined 0.2% on month in September as declining oil prices had a dramatic impact on the overall price level in the Euro zone's number one economy.
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Upcoming fundamentals: ECB rate decision day
The most important economic event on Thursday in the European Central Bank's meeting in Malta. The Governing Council is there to decide, whether to signal an increase of the stimulus programme and prolong it beyond September 2016. Markets expect to hear some hints from President Mario Draghi during the press conference at 12:30 GMT. Moreover, some analysts suggest the ECB may decide to cut the deposit rate from the current level of -0.2%. Additionally from the fundamental part, Spain's jobless rate is estimated to drop from 22.4% to 21.9% in the third quarter on a quarterly basis, while US existing home sales (14:00 GMT) are projected to increase from 5.31 million to 5.38 million in September on year-to-year basis.
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EUR/USD still bounded between 1.13 and 1.14
Before the European Central Bank meets in Malta on Thursday, the EUR/USD cross decided to stay on hold during the previous 24 hours. The near term development is fully dependent on the ECB's decision today. In case more QE is signaled, we will expect the Euro to drop below 1.13, potentially targeting the demand area at 1.1240. Otherwise, more hawkish language may push EUR/USD upwards throughout the trading session, while bears are aiming at regaining the 1.14 mark back.Daily chart
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In the one-hour chart the currency pair continues to hover below the 200-hour SMA, which is currently placed at 1.1374. This case supports bears at the moment, but a lot will depend on the ECB decisions on Thursday.
Hourly chart
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SWFX market sees no rapid changes in sentiment
Among clients of OANDA and SAXO Bank, the sentiment remains largely negative towards the Euro. With 59% of OANDA open positions being bearish, the share of short trades at SAXO Bank stays even higher at 69% today.
Spreads (avg,pip) / Trading volume / Volatility
Community members forecast the Euro to grow against the US Dollar this week
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In a week time, the sentiment on this currency pair changed significantly, as now 60% of traders predict the Euro to gain in value. Meanwhile, the consensus forecast for this Friday, October 23 stands at 1.14.
Read More: Community Forecasts
According to the Berkeley who supports the bullish move "the EUR/USD fell on Friday and retreated 0.35% to 1.1347 in late trade and ended the week 0.18% lower. On 19th October it is pulled back to 1.1305, but I think it will get back up to 1.1370-1.1450." However, Daytrader21 supposes that there is still no clear direction for EUR/USD.
Average forecast says EUR/USD will trade at 1.14 by January 2016
Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between Sep 22 and Oct 22 expect, on average, to see the currency pair around 1.14 by the end of January 2016. Though the majority of participants, namely 55% of them, believe the exchange rate will be generally below this mark in ninety days, with 35% alone seeing it below 1.10. Alongside, 25% of those surveyed reckon the price will trade in the range between 1.14 and 1.20 by the end of January. © Dukascopy Bank SA