- 58% of all positions are short
- More than 60% of 50/100-pip pending commands are set to sell the Euro
- Bears keep eye on 1.12 (monthly PP; weekly S3), but 55-day SMA (1.1161) should bolster prices
- Aggregate daily technical indicators are no longer giving bullish signals
- Economic events to watch over the next 24 hours: Euro zone CPI (Mar); US CPI (Mar) and Unemployment Claims (Apr 9); FOMC Members Powell and Lockhart Speak
US retail sales unexpectedly declined in March as households cut back on purchases of automobiles, reinforcing the evidence that economic growth weakened in the first quarter and a sign of consumers caution amid slow wage growth and overseas troubles. Sales at retail stores and restaurants slid by a seasonally adjusted 0.3% in March, despite the forecasted 0.1% gain, according to the Commerce Department, following a flat reading in February and a drop in January. Most economists had not expected from Americans to be so cautious about their spending this year, despite steady job gains and lower gas prices. This is a key reason why a lot of analysts now believe the world's number one economy barely expanded in the first quarter of 2016. In the meantime, core retail sales rose 0.2% last month after being little changed in February. Economists claim that the increase was due to a 0.9% jump in receipts at service stations that probably reflected the recent pickup in gasoline prices. In addition to that, the surprise weakness in the retail sales data underscores concerns among several Federal Reserve officials, who have dramatically pared back their expectations for rate rises this year amid increased concerns about the growth outlook, turbulence abroad and troubles in the energy and industrial sectors.
Australia's unemployment rate unexpectedly declined to the lowest level in two-and-a-half years in March, reflecting an improvement in business confidence and signalling the Reserve Bank of Australia is unlikely to ease policy in the near-term. The jobless rate dropped to 5.7% in March, according to the Australian Bureau of Statistics. A net 26,100 jobs were added to the economy in March, the biggest increase in 2016 and stronger than economists' forecast of 18,000. The stronger labour market also further evidence that record-low interest rates are boosting a revival in industries like construction, tourism and education as a resource boom winds down. Still, the outlook for business investment remains bleak and the outlook is clouded in China, Australia's biggest trading partner. In light of financial turmoil in China and growing divergence in monetary policies around the globe, Australian policy makers continue to navigate the economy to a post-mining future. A further hurdle has been a rebound in the Aussie, which surged more than 7% in March to be the best performer in a group of 10 major currencies last month. Reports earlier this week showed a growing divergence between how businesses and consumers view the outlook for the economy. While Australian firms viewed business conditions as being at their best level since 2008 last month, Australians were less confident about the economic outlook.
Upcoming fundamentals: Euro zone inflation expected negative
The only data release from Europe will cover consumer prices in the common currency area. Published at 9:00 GMT, this is going to be the final gauge for March. Economists expect the reading at -0.1% and the core CPI at 1.0%. American inflation is additionally out at 12:30 GMT. Consumer prices in the world's largest economy have probably increased by 0.2% month-on-month in March, therefore maintaining the annual pace of advance unchanged at 1% on the headline inflation and at 2.3% on the core basis. Meanwhile, Fed Governor Jerome Powell and Atlanta Fed President Dennis Lockhart are going to speak later in the day at 14:00 GMT. They will participate in different events and non-voting FOMC member Lockhart is more likely to directly talk about monetary policy.
EUR/USD falls to 1.1260 after bearish rally
US fundamentals used to have little influence on the Dollar, because this currency continued to advance at the fastest pace since January. EUR/USD sank 112 pips and put an end to the eight-day long sideways development. It breached the weekly S1 and the 20-day SMA, thereby switching attention to the 1.12 mark that is backed by the monthly pivot and the last weekly demand line. An immediate failure below here is unlikely, given the approaching 55-day SMA at 1.1161. Long-term dips will have to be capped by the 200/100-day SMAs at 1.1053/30.Daily chart
For the moment, after the 200-hour SMA and the earlier April uptrend are penetrated, the pair is expected to tumble as low as 1.1025. This is where the closest support is resting, namely the downtrend connecting the February high and the March 10 high. Although the Euro has a chance to recover over Thursday, persisting bearish pressure is probably going to be formidable enough in order to avoid this scenario.
Hourly chart
Market sentiment steady despite substantial volatility
The gap between OANDA market participants, who want to buy and sell the Euro vs US Dollar, is nowhere near to begin tightening. At the moment the negative difference amounts to more than 28%, with bulls holding 36% and bears keeping 64% of all trades. On the contrary to that, SAXO Bank's shorts continue suffering for a second consecutive day, as their market share was cut to 65% by Thursday morning from about 70% yesterday.
Spreads (avg,pip) / Trading volume / Volatility
Dukascopy Community members expect a rally of EUR/USD this week
This week the sentiment among Dukascopy traders ameliorated to approach average level of several last weeks, as now 61% of them are waiting for the pair to advance from Monday to Friday. Average market expectation, however, moved slightly up to reach the 1.14 level on Friday, April 15. Moreover, 45% of all votes are set in range between 1.13 and 1.145, meaning that the pair is likely to hover around current levels for some time in the future.
One of the opinions about this week's development of the pair is provided by Besim76, who says that "EUR/USD gained to close over the 1.14 level seeing a gain of 0.13% on the week as the US Dollar continued to show weakness. The Euro may be a bit more susceptible to weakness if risk markets rally (the portfolio re-balancing channel effect is still in play). However, the sensitivity the Euro will have to gains by equity markets and lower core sovereign yields may be limited thanks to Fed Chair Yellen's heightened dovish posture."