On Thursday morning, a previously not noted macroeconomic data release caused a major Euro decline. The publication of the Spanish Flash CPI revealed information that inflation in the Euro Zone might be far below what was previously assumed.
The Spanish Flash CPI was expected to show a stunning decline of inflation, down to 2.4% from the previous 2.8%. The actual data was 2.2%, which is almost at the ECB target. Moreover, note that inflation in Spain has been steadily declining. It has decreased from 3.6% in May down to 2.2% over the span of three months.
Namely, the European Central Bank might easily increase their rate cut program. Due to the signal of potential increased weakening of Euro rates, the EUR/USD plummeted 40 base points or 0.36% in the ten minutes following the release.
Economic Calendar Analysis
On Thursday, the US Preliminary GDP data publication might move the markets. The market consensus is that the US GDP has increased by 2.8% in the last quarter.
On Friday, markets will adjust to the publication of the US Core Price Index publication at 12:30 GMT.
Beforehand, the release of the European common CPI Flash Estimate at 09:00 GMT might impact the value of the Euro.
EUR/USD hourly chart analysis
A continuation of the decline might stop near the weekly S1 simple pivot point at 1.1076 or the support ranges near 1.1050 and 1.1000.On the other hand, a potential recovery is set to face major resistance. The 1.1100 mark could slow down the rate first, before it reaches the combination of the 50, 100 and 200-hour simple moving averages that are approaching the weekly simple pivot point at 1.1138. Higher above, note the 1.1160/1.1175 and 1.1190/1.1200 zones.
Hourly Chart
EUR/USD daily chart's review
Prior analysis: "On the daily candle chart, the pair has broken the upper trend line of the channel up pattern and reached the resistance of the major resistance zone at 1.1130/1.1200.A move through this major resistance zone could stop at the next high level range at 1.1235/1.1280.
On the other hand, a bounce off the resistance range could look for support in round exchange rate levels at 1.1100, 1.1050, 1.1000 and 1.0950. All of these levels have acted as support and resistance."
On Thursday, the pair appeared to have properly bounced off the resistance range and had reached below 1.1100 level's support.
Daily chart
Read More: Technical Analysis
Traders are shorting
Last week, on Wednesday, the open positions were 74% short and pending orders were 55% to sell.
On Monday, Dukascopy traders were shorting the pair, as 75% of all open position volume was in short positions.
Meanwhile, pending trader set up orders were neutral. Namely, in the 100-point range around the pair, 51% of orders were to sell.
This week, on Thursday, traders have started to gain, as the rate is finally below last week's levels. Previously, traders sat on loses.
At midday, 74% of volume was in short positions and orders were 65% to sell. It appears that more traders are ready to short the pair.