- SWFX market sentiment is 74% bearish
- 59% of pending orders in 100-pip range are to BUY the Euro
- 75% of total pending commands are to sell the Euro
- Upcoming events: ECB Minimum Bid Rate, ECB Press Conference, US Unemployment Claims, US New Home Sales
The decline of the US Dollar had continued by Wednesday morning. Namely, during the early hours of Wednesday's trading session the currency exchange rate had reached the 1.2330 mark.
The Euro strengthened against the US Dollar, reflecting the unexpectedly upbeat ZEW sentiment report. The EUR/USD exchange rate added 12 base points to get back into the 1.2250 area.
Germany's investors showed the strongest confidence in eight months, representing an optimistic tone for the economy entering 2018. The Mannheim-based ZEW Institute report revealed on Tuesday that the German Economic Sentiment Index rose to 20.4 points in January, following 17.4 in the last month of 2017.
ECB in focus
The main focus in this trading session is put on the European Central Bank which is to release its Minimum Bid Rate and hold a press conference at 1245GMT and 1330GMT, respectively.
Meanwhile, the US will publish the weekly Unemployment Claims at 1330GMT and New Home Sales at 1500GMT.
EUR/USD awaits information from ECB
The common European currency surged against the Greenback during the first part of Wednesday. The upper channel line of the senior channel failed to limit the pair, thus allowing further appreciation towards the weekly R3.This upward momentum which was mainly driven by Mnuchin's comments should allay in the nearest hours, thus allowing bears to dominate this session. However, the ECB is to release its Minimum Bid Rate and have a conference at 1245GMT and 1330GMT, respectively.
In case of any positive surprise, the rate could briefly trade above the 1.25 mark. By and large, investors are waiting for some information on whether and/or how the Bank is to curb the Euro's strong appreciation which has pushed the rate up to its highest level since late 2014.
Downside target could be 1.23.
Hourly Chart
Following the massive 111-pip surge on Wednesday, the pair was trading flat this morning. This high positioning of the pair suggests that bears are likely to strengthen in the remaining trading week and even beyond.
The nearest support is the weekly R2 at 1.2393, while a more realistic target for today could be the weekly R1 located near 1.23.
Daily Chart
Market sentiment is strongly bearish
The bearish market sentiment has increased by two percentage points with 74% short positions.
In the meantime, the outlook for the two currencies against the rest of the traded financial instruments is the following: the Euro is 75% bearish and the US Dollar is 65% bullish.
OANDA traders are increasingly bearish, as 63% of open positions are short (+2%). SAXO Bank clients are likewise bearish on the pair with 60% short positions (+1%).
Spreads (avg, pip) / Trading volume / Volatility