- SWFX market sentiment is 59% bearish
- Trader set up pending orders are 56% short
- Pair opened Tuesday's session at the 1.1142 level
- Aggregate daily technical indicators bet EUR/USD will surge
- Economic events to watch over the next 24 hours: German Unemployment Change (August); EU CPI Estimate (August); EU Unemployment Rate (July); US ADP Employment Change (August); US Chicago PMI (August); US Pending Home Sales (July)
Confidence among American shoppers improved unexpectedly in August, according to the Conference Board's monthly survey. The survey's Consumer Confidence Index increased to 101.1 points in the eight month of the year, compared to July's reading of 96.7, while market analysts anticipated a slighter acceleration to 97.1 in the reported month. Nevertheless, back in August 2015, the indicator was higher at 101.4 points. The survey is a closely-followed barometer of consumer attitudes towards business conditions, personal finances, jobs and short-term outlook. The data showed that 30% of respondents stated that business conditions were "good" in August, following July's 27.3%, whereas 18.4% stated conditions were "bad", unchanged from last month. 17.3% of respondents predicted an improvement in the next six months, compared to last month's 15.7%, while 11.1% predicted deterioration, down from July's 12.4%. The share of respondents expecting their incomes to improve remained resilient; however, the outlook on the job market was mixed. Consumer sentiment among Americans remained in the positive territory for more than a year. A reading of 90 or above indicates economic expansion. The US economy is mostly driven by consumer spending, which accounts for about 70% of all economic growth.
The Federal Reserve's (Fed) favorite measure of inflation held steady in the seventh month of the year, official data revealed on Monday. According to the Bureau of Economic Analysis, the Personal Consumption Expenditures Price Index (PCE), excluding the volatile food and energy components, rose 1.6% year-over-year in July, unchanged from last month, while market analysts anticipated a slight decrease to 1.5% in the reported month. On a monthly basis, the core PCE grew 0.1% in July, in line with analysts' expectations and the previous month's reading. The overall PCE advanced 0.8% on a yearly basis in the same month, following June's 0.9% and meeting market forecasts. The data also showed that personal spending climbed 0.3% on a monthly basis in July, down from June's upwardly revised 0.5% gain, whereas personal income jumped 0.4% on the same basis in July, compared to last month's upwardly revised 0.3% hike. Both readings came in line with analysts' projections. Federal Reserve Chairwoman Janet Yellen left the door open for a hike this year during her speech in Wyoming, arguing that the US economy created a lot of jobs lately and it is on a moderate growth path, despite recent disappointing economic data.
Upcoming fundamentals: Unemployment and other indicators
The EUR/USD pair on Wednesday will be affected by various fundamental data releases, which will affect the strength of both currencies. In the first half of the day data from the European Union was and is still set to be released, as German Retail Sales and French CPI were already out by 7:00 GMT. At 7:55 GMT the German Unemployment Change for August will continue to set the tone for the pair. Afterwards, at 9:00 GMT, the EU CPI Estimate for August will be released, and the data will be available on an annual timeframe. As the second half of the day will begin, data from the US will be released. First of all the US Dollar's strength will be set by the ADP Employment Change for August, and the release will be covered by the Dukascopy team live on the webinar. At 13:45 GMT Chicago PMI index for August is set to provide a look at the regions production outlook. Last but not least, the US Pending Home Sales for July will be released at 14:00 GMT as a month-to-month change in percentage.
EUR/USD rebounds and surges on Wednesday
Daily chart: The common European currency rebounded against the support provided by the weekly S1 at 1.1132, and it is surging on Wednesday morning, as the rate faces no resistance up to the level of 1.1203, where the 20-day SMA is located at. The before forecasted rebound happened in accordance with the previous prediction, that the 20 and 100-day simple moving averages will move lower and pressure the rate to fall to the support cluster below. As now it has found the required support, the currency exchange rate is most likely to move back upwards to the two SMAs.Daily chart
Hourly chart: The hourly chart shows that the fall of the Euro against the Greenback happened in the boundaries set by the 20-hour simple moving average and the lower Bollinger band. The rate had a general downward direction, while it fluctuated between the two indicators of volatility. The currency pair hit the weekly S1 at 17:00 GMT, and the rate rebounded around 18:00 GMT. At the moment, it can be seen that the rate has changed the general direction. In the meantime, there remain the fluctuations caused by the 20-hour SMA and the lower Bollinger band. However, the volatility has begun to decrease by 6:00 GMT, as the 55-hour SMA was moving in from the upside.
Hourly chart
Traders remain bearish on the pair on Wednesday
OANDA trader bearish sentiment has decreased compared to Tuesday's 57.09%, as, at the moment, 54.07% of OANDA open positions are short. In addition, SAXO Bank clients have also decreased their bearish stance, as their open short positions are now at 60.49% compared to 62.14% of last trading session.