- 57% of all SWFX market positions are short
- Pending commands are positive on the observed currency pair (54-56%)
- 20-day SMA/monthly PP generate the nearest demand at 1.1376, while weekly PP at 1.1468 is the closest resistance line
- Daily technical indicators are, on average, giving signals to buy EUR/USD
- Economic events to watch over the next 24 hours: French and Swedish CPI (Apr); Euro zone Industrial Production (Mar); US Unemployment Claims (May 7); FOMC Members Mester, George and Rosengren Speak
Britain's manufacturing output recorded the biggest annual decline in any month for nearly three years, fuelling fears over the health of the country's overall economy. The Office for National Statistics said UK manufacturing output edged up by only 0.1% in March on a seasonally-adjusted basis, after falling 0.9% in February. Factories' production in March was down 1.9% on the same month of last year, the sharpest year-on-year decrease since May 2013. Manufacturing, which makes up 70% of industrial production, has been hard hit by the crisis in the steel sector. The official data also showed that total industrial production, which is made up of manufacturing, mining and quarrying, North Sea oil and gas, water supply and the supply of electricity and gas, rose to 0.3% month-on-month from a decline of 0.2% a month before, but less than expected. The production was primarily driven by stronger output in electricity and gas that rose 3.3%, which was due to unseasonably cold weather in March. Britain's industrial production is 10% lower than it was when the UK entered recession in early 2008. The ONS added the updated industry figures will have no real effect on the second estimate of the GDP in the first quarter. The first estimate showed the British economy grew 0.4%.
A bulk of data releases on the European economy provided mixed diagnoses for largest economic trend setters over the continent for March and April. While German industrial output dropped 1.3% in March, falling short of investor expectations, data on the trade balance showed a positive trend, jumping as high as 26 billion euros, compared to a 20.6 billion euro investor estimate, and ultimately sent mixed signals about German economic health. Destatis reported that exports increased 1.9% in March from a month earlier, while imports dropped 2.3%. Moreover, according to the Bundesbank, Germany's current account increased to 3.04 billion euros, up from 21.1 billion a month earlier. France displayed weaker economic performance over the third month of the year, as industries followed a pattern similar to Germany's, disappointing investors with a 0.3% decline in output, while an advance in government deficit added to the aggravation. On an annual basis, industrial output in France fell 0.8% in March, down from 0.4% posted in February. According to the European Commission's Spring Economic Forecast, France's economic growth outlook was left unchanged, with the EC forecasting it will grow 1.3% and 1.7% in 2016 and 2017, respectively. Last year the French economy expanded by 1.2%.
Upcoming fundamentals: Inflation and manufacturing data from Europe
Two European countries, France and Sweden, are due to release their consumer price data for the month of April at 7:30 GMT and 8:00 GMT, respectively. The Euro zone's second largest economy has posted a confident 0.6% GDP growth in Q1; however, this is quite unlikely to have any influence on price pressure. Annual CPI in the country is predicted at -0.2%, unchanged from March. In Sweden, however, negative interest rates of the central bank are probably having more impact on inflation. This country's inflation is estimated at 0.9% on a year-to-year basis, up from 0.8% in the previous month. Meanwhile, Euro zone's industrial production statistics for March is out at 9:00 GMT. With no advance on a monthly basis anticipated, annual industrial output is likely to continue expanding at a moderate pace of 0.9%.
EUR/USD gets bullish momentum from 1.1375
Provided with heavy bid momentum at 1.1375, yesterday the EUR/USD currency pair commenced a major rebound above the 1.14 mark and closed the session to the upside for the first time in seven days. Strong demand was generated by the monthly pivot along with the 20-day SMA and March-April uptrend, which should hold as the key support. The gains have a potential to prolong through 1.1468 where the pair will meet the weekly pivot point. Daily technical indicators continue giving bullish signals, meaning the growth scenario cannot be ruled out.Daily chart
The 1H chart's case assumes the EUR/USD currency pair will not be a subject to major gains in the nearest future. It is expected to be pressed down by a still upward-developing 200-hour SMA, currently at 1.1443. As soon as the moving average turns down, the likelihood of the continuous sell-off should rise even more. Key target bearish area is placed somewhat above 1.12, particularly at the April low of 1.1215.
Hourly chart
SWFX sentiment tanks to 5-day low
General sentiment of both OANDA and SAXO Bank marketplaces is remaining bearish with respect to the researched currency pair. However, we are still able to observe some improvement in the bullish sector. OANDA clients are less than 57% negative today (60% yesterday), while about 69% of SAXO Bank positions stay short.
Spreads (avg,pip) / Trading volume / Volatility
Dukascopy Community members are bearish on this week's perspectives of EUR/USD
Almost eight out of ten Dukascopy traders are suggesting the common European currency will diminish against the US Dollar this week, as they have provided a forecast to sell this currency pair. The vast part of price expectations is placed in the range between 1.12 and 1.15; however, some extremely positive estimates from some Community members naturally pushed the average projection for May 13 as high as 1.18.
Among traders, pisakjanos assumes the pair will see no trend over the period. He says that "taking into account Technical Analysis, mainly 4H chart, I am expecting a neutral development." Meantime, Jignesh has provided a clear bearish explanation of the case, as he foresees EUR/USD lower: "The weekly candle on the instrument is showing a strong bearish signal. The US Dollar index, at the same time, is sitting against some significant support, marking the lows of 2015. I am expecting further bullishness in the USD this week, though the long-term bullish trend of EUR/USD is yet to confirm a long term reversal."