- SWFX market sentiment is 60% bearish
- Trader pending orders are 63% to sell
- Pair opened Wednesday's session at the 1.1214 level
- Aggregate daily technical indicators bet EUR/USD will surge
- Economic events to watch over the next 24 hours: US Core Durable Goods Orders, Yellen's speech, Draghi's speech, Crude Oil Inverntories
Confidence among American shoppers rose unexpectedly to its highest level since the recession in September, official data revealed on Tuesday. According to the Conference Board, the Consumer Confidence Index (CCI) jumped to 104.1 in September, whereas market analysts expect it to come in at 98.6 in the reported period. Meanwhile, the preceding month's reading was revised up to 101.8 from the originally reported 101.1 points. The survey is a closelyfollowed barometer of consumer attitudes towards business conditions, personal finances, jobs and short-term outlook. The data showed that 27.9% of respondents stated that jobs were plentiful in the ninth month of the year, following August's 26.8%. Furthermore, only 21.6% claimed that jobs were hard to find, compared to last month's 22.8%. The share of those expecting more jobs to be created in the upcoming months increased to 15.1% from last month's 14.4%, while the share of respondents expecting less jobs declined to 17.0% from August's 17.5%. The proportion of respondents expecting their incomes to worsen fell to 10.3% from 11.0% in the prior month. The US economy is mostly driven by consumer spending, which accounts for about 70% of all economic growth.
According to the official figures, industrial production across the 19-country Euro zone slipped by 1.1% in July, showing a development that could seriously weigh on the region's third-quarter growth. It is worth to point out that industrial production in the single currency region has been highly volatile for the last months, jumping in some and slumping in others. But overall, during the last 12 months it has declined, a key source of weakness for the UK economy that has struggled to create jobs and now are facing strong uncertainties after the UK's June vote to leave the European Union. In the meantime, the production of capital goods decreased by 1.7%, while energy production was 1.4% lower and durable consumer goods production lost 0.7%. The production of intermediate goods, in turn, was down 0.5% while production of non-durable consumer goods was unchanged.
Upcoming fundamentals: US Core Durable Goods orders.
High impact data is bound to shake the markets on Wednesday afternoon, when the US Core Durable Goods Orders, Yellen's and Draghi's speeches, as well as Crude Oil Inventory data comes out. Regarding the Durable goods announcement, -0.5 will be the figure defining a positive or negative surprise at 12:30 GMT, while the combination of Draghi's and Yellen's speeches which take place at 14:00 and 14:30 respectively, could cause the markets to behave unpredictably. Crude Oil Inventory data comes out at 14:30 GMT as well.
EUR/USD fails to retrace
Daily chart: EUR/USD confirmed its change of track, opening bearish for the second consecutive session. The dip is currently stalled by the 20-day SMA, with risk at 1.1201, the weekly Pivot Point. A cluster made up by the 55-day SMA and the monthly Pivot Point at 1.1185/90 could further reduce bearish momentum or cut the losses entirely for Wednesday. In case the pair accumulates some strength to reverse the gloomy themes, 1.1260 will be a level to watch, putting 1.1280/84 into perspective if broken. Aggregate technical indicators as well as the 20-day and 55-day SMA crossover both give out BUY signals, suggesting that the retracement towards the broken channel trend-line could still be in the picture.Daily chart
Hourly chart: EUR/USD stays stuck in between the 100 and 200-hour SMAs, testing 1.1201/03 to potentially prove further weakness when a break below occurs. The pair shows lack of interest to complete the retracement and close the day near the broken channel trend-line, as it has already consolidated on an hourly basis. Rallies are likely to be cut at 1.1214, the intra-day resistance, and dips below the monthly Pivot Point at 1.1190 seem reasonable just in case fundamental surprises shake the market.
Hourly chart
Market sentiment strongly bearish
The bearish sentiment has remained stable among SWFX traders, as 60% of open positions are short on Wednesday. Pending orders have not shown any change as well, showing that 37% of outstanding commands are long.
OANDA traders have shown a sharp increase in their bearish sentiment, as 56.69% of open positions are short. SAXO Bank clients have, however, decreased their bearish stance, as open short positions now add up to 64.91% compared to 67.18% on the previous trading session.