- Short positions took profit, sending bearish share down to 57% from 59%
- Pending orders remain strongly bearish (>60%) before ECB
- Any losses of the Euro are expected to be contained by 1.12, while rallies should find a limit at 1.1460
- Trend-based and momentum-measuring daily technical indicators are giving bearish signals on Thursday
- Economic events to watch over the next 24 hours: Sweden Central Bank Interest Rate Decision; ECB Interest Rate Decision; US Unemployment Claims (Apr 16) and Philadelphia Fed Manufacturing Survey (Apr)
The jobless total in the UK increased for the first time in almost a year. The UK unemployment rose by 21,000 to 1.7 million between December and February, and that was the first increase since the May-July period of the last year, the Office for National Statistics reported. The number of people claiming unemployment-related benefits increased by 6,700 in March to 732,100, the first monthly rise since last August. Meanwhile, the unemployment rate remained at anticipated 5.1%, which is still down by 0.5% on a year ago and the lowest since 2005. Other data from the ONS showed that the number of self-employed workers increased by 120,000 to a near record 4.6 million, while people on government training and employment programmes fell by 9,000 to 102,000. Data also showed that there were 14.6 million women in work, down by 40,000 on the previous three months and the first fall since the autumn of 2012. The quarterly reduction in women's employment was the biggest for five years. In contrast, male employment was almost 16.8 million, the highest since records began in 1971. The ONS assume that while it is too soon to be certain but, with the jobless up for the first time since mid-2015, and employment facing its slowest rise, it is possible that recent developments in the job market may be easing off.
German economic sentiment improved in April, beating expectations, according to ZEW survey. Economic sentiment continued to advance, improving for the second consecutive month from the lowest level since October 2014 that was registered in February. The ZEW Centre for Economic Research report said that the index rose to 11.2 and gained 6.9 points compared to the previous month exceeding expectations of 8.0. Meanwhile, the index of Euro zone economic sentiment unexpectedly soared to 21.5 in April from 10.6 a month earlier, settling well above forecasts for a reading of 13.9. A lot of analysts assume that the rise of sentiment index confirms that the German economy has continued its solid growth performance. Domestic demand, and in particular private consumption, has become an important growth driver. Looking ahead, they believe the economy should continue its current positive, though not breathtakingly strong, momentum next year. Nevertheless, the data does not change the fact that Germany's exports have been badly affected by the downturn in emerging markets. Thus, for its part, ZEW says that assessment of the current situation in Germany is worsening. In other words, Germany's past days are likely to be better than its near term outlook.
Upcoming fundamentals: ECB preview suggests there is room for Draghi's surprise
Today the Governing Council of the European Central Bank is gathering for another monetary policy meeting. Last time the central bank cut all of its facility interest rates, expanded the QE programme, increased the scope of asset purchases to non-bank corporates bonds and introduced four new rounds of long-term refinancing operations. Today such moves are not predicted by any of analysts; however, Mario Draghi may still use the press conference's opportunity to play down his hawkish comments he had made last time about little possibility of more easing. At the moment the market is suggesting the ECB will be forced to act further, in case inflation pressures and economic growth remain weak. Investors see the cut of a deposit facility rate to 0.5% and expansion of monthly asset purchases possible as soon as September. But today Mr. Draghi and his team may add to verbal intervention in order to send the Euro exchange rate down across the board, the task they had failed to accomplish in December and March.
EUR/USD diminishes with ECB meeting looming
Bullish intentions of the Euro failed near the 1.1390 mark on Wednesday. Additionally boosted by upbeat US housing figures, EUR/USD dropped back under the weekly pivot and closed below 1.13. The focus is now turning to the cluster of supports at 1.12 with the key look at the monthly pivot, weekly S1 and 55-day SMA. Moreover, the lower Bollinger band is heading upwards, currently at 1.1164. Dovish Draghi is expected to send the pair to this area, which is going to attempt containing the loss. Today, daily technical indicators are also showing negative signals.Daily chart
Consolidation above the 200-hour SMA (1.1332) was unsuccessful and the pair came back below this technical level. At the moment the bears have a task of penetrating the 1.1233 mark, namely the low of April 14. However, a selloff on Thursday is not guaranteed amid uncertainty surrounding today's ECB meeting. In December and March these meetings had caused EUR/USD's climb.
Hourly chart
Pending orders plunge in the run up to ECB
About only 38% of all OANDA market players are betting the Euro is going to appreciate at the expense of the Dollar, which leaves the bearish side with an overall confident majority of more than 60%. On the other hand, SAXO Bank sentiment has surprisingly improved over the previous working day, as the share of bearish transactions dipped from 71% to 67%.
Spreads (avg,pip) / Trading volume / Volatility
Dukascopy Community members are quite divided on this week's perspectives of the pair
This week sentiment deteriorated further, as only 45% of participants in our quiz expect the Euro to rebound. Jignesh says "Three times a charm for Draghi & the ECB. Though the EUR/USD remains in a bullish trend, this week the ECB will hold a press conference. In the past two meetings, Draghi's words had the pair move higher after the fact, likely an unintended reaction. With the Euro nearing highs, Draghi will once again bring out his best jawboning skills to the table to try and talk the pair lower."
In the meantime, there are traders who suggest there is room for gains of the cross. For instance, PisakJanos thinks that "as the support at 1.124 level has been reached, I am expecting a recovery of the pair, sustained by the policy of the FED."