- SWFX market sentiment is 54% bearish
- 58% of pending orders in 100-pip range are set to SELL
- 52% of traders are bullish on the Dollar
- Upcoming Events: US CPI, Crude Oil Inventories, Federal Funds Rate
The currency exchange rate continues to anticipate the upcoming Fed meeting via slowly fluctuating in a junior descending channel. Depending on the central bank decision as well as the result of the latest report on inflation the pair might either surge towards the weekly R1 at 1.1860 or fall straight to the monthly S1 at 1.1650.
The Euro slipped against the US Dollar on the report, revealing some signs of pessimism among the German investors this month. The EUR/USD currency pair lost 13 base points or 0.11%, to touch the presumed level of support at 1.1770.
German investors' mood worsened more than anticipated in December, reflecting uncertainties over the regulations of a government to be formed, reforms in the EU and Britain's quit from the bloc. The Mannheim-based Centre for European Economic Research stated that its German Economic Sentiment Index came in at 17.4 points for the current month, compared with 18.7 in November. Meanwhile, a separate gauge of the current conditions' assessment rose to 89.3.
Interest rate decision
Today at 19:00 GMT the FOMC will announce its decision on the Federal Funds Rate, which is widely expected to be raised from 1.25% to 1.50%. Accordingly, this event is likely to cause great volatility in the markets. However, there is also a need to take into account an effect from release of information on inflation as well as President Trump speech at the Treasury Department about tax reform.
EUR/USD drops to 1.1730 amid PPI release
In accordance with expectations, until release of information on the US PPI the currency rate was slowly fluctuating near the 55- and 100-hour SMAs. But since the data was better than analysts' expected the pair broke through the 38.2% Fibonacci retracement level and once again ended up in support zone located between the 1.1730 and 1.1722 marks. Until release of an update on the American inflation the rate is expected to continue fluctuating near the upper boundary of a minor descending channel. In case of disappointing result, depreciation of the buck might elevate the pair up to the 1.1800 level. However, the rate is still expected to plunge to the area between the 23.6% retracement level at 1.1681 and the monthly S2 at 1.1652 due to alleged interest rate hike.
Hourly Chart
As the currency rate has managed to sneak below the monthly PP, the 100-day SMA, the 38.2% Fibonacci retracement level and the 55-day SMA, from technical point of view it should continue moving to the bottom. In such case the likely target for the pair will be an area located between the 1.1670 and 1.1650 marks.
Daily Chart
Market sentiment is bearish
In result of the previous trading session the bearish market sentiment slightly decreased, as 54% of open positions are short now.
In the meantime, the outlook for the two currencies against the rest of the traded financial instruments is the following: the Euro is 60% bearish and the Dollar is 52% bullish.
Traders of OANDA remain bearish, as 58% (-2%) of open positions are short. Meanwhile, SAXO are bearish on this currency pair with 53% (-4%) of open short positions.
Spreads (avg, pip) / Trading volume / Volatility