- Bullish traders regained only four pp to send their SWFX share to 38% from 34%
- Neglecting bearish sentiment, pending orders are Euro-bullish in almost 70% of all cases
- Another boring day in terms of fundamentals is ahead of us
- Technical indicators have no confident opinion on EUR/USD's movement over the next 24 hours
- Economic events to watch over the next 24 hours: German Industrial Production, Current Account and Trade Balance (Dec); US JOLTS Job Openings (Dec)
The Euro zone investor sentiment index declined for a second month in a row to the lowest level since early 2015, as prospects for the US economy deteriorated and the German economy cooled. Sentix's economic sentiment index for the Euro zone dropped from +9.6 points for November to +6.0 in December, the lowest since April. At the same time, the expectations index plunged to 1.5, down from 6.3 a month earlier, the lowest level since November 2014. Investor confidence in Germany, the Euro zone's number one economy, hit its weakest point since November 2014, with the corresponding gauge falling to 14.5 in February from 18.1 a month earlier. The expectations index plunged to –2.6 in the current month down from 1.8 and the current situation index retreated from 35.6 in January to 33. Meanwhile, the ECB's Executive Board member Benoit Coeure said another boost to QE programme is possible and policy makers are now discussing about which assets and what amount should be purchased ahead of the March meeting. The ECB's measures are working, but the central bank is ready to deploy more stimulus to get inflation to the targeted level. Coeure also added that the current period of ultra-low interest rates will last as long as needed, saying the ECB did not work under market pressure.
Japan logged an 18th current account surplus in a row amid a plunge in crude oil imports and a travel surplus due to the Japanese Yen's depreciation. In the final month of 2015, Japan reported a current account surplus of 960.7 billion yen, compared with 225.9 billion yen a year earlier, according to the Finance Ministry. Trade exports increased 5.5% to 6.247 trillion yen, while imports dropped 2.2% to 6.059 trillion yen. In 2015, the nation's current account surplus surged more than six fold from the previous year to 16.64 trillion yen, with imports slumping 10.3%, while exports rose 1.5%. Japan has been relying heavily on energy imports since the March 2011 Fukushima nuclear catastrophe, with most of the country's commercial reactors remaining shut down. Oil prices are likely to continue to be a major driver influencing Japan's trade balance, as exports are predicted to remain weak this year. The average crude oil imports plummeted 41% as average oil prices almost halved to $55 per barrel in 2015. In addition to that, a record travel surplus of 1.12 trillion lifted the current account balance, as the Yen's weakness attracted foreign visitors to Japan. The number of foreign tourists visiting Japan surged 47.1% in 2015 from a year earlier to a record 19.74 million. The Japanese Yen lost 14.5% versus the US Dollar from the previous year to trade at 121.09.
Upcoming fundamentals: All eyes on oil, stocks during another silent day
Tuesday will not be a day rich on fundamental releases. Similar to Monday, there is some data from Germany released throughout the morning session. However, by the time this report is released all German numbers will have already been published. American session traders will be focusing on JOLTS jobs openings numbers at 15:00 GMT, which seems to be the only statistics able to move the EUR/USD currency pair today. Job openings are a leading indicator for employment in the US, even though it is released relatively late. Provided that the Euro has been acting a safe-haven currency along with the Yen and Franc, some attention should also be paid to equity and commodity market movements.
EUR/USD to challenge monthly R3 at 1.1246
EUR/USD turned around yesterday, as rising market instability raised attractiveness of the Euro and sent the pair back to 1.12. The monthly R2 at 1.1115 acted as a reliable support line and managed to avoid a deeper sell-off. The bulls are watching the monthly R3 at 1.1246, which has not been overcome yet. A spike above here will neutralize our outlook on EUR/USD, meaning we continue to see correction as the base case. Intraday losses are possible in the direction of the monthly R2, and a failure here should alleviate any bullish pressure to allow for a drop down to the weekly PP at 1.1072.Daily chart
Expectations remain optimistic from the point of view of the one-hour chart. There, the currency pair has consolidated above the September 2015 low by confirming safety of this level yesterday. More demand is offered by the quickly-rising 200-hour SMA at 1.1012.
Hourly chart
EUR/USD's perspectives remain dark, according to SWFX traders
Expectations on the matter are broadly steady on both OANDA and SAXO Bank markets in the morning on Tuesday. With OANDA, the EUR/USD cross is holding the worst bullish-bearish gap for several days in a row, as the bulls are accounting for only 39% of the entire market. Alongside, SAXO Bank clients are shorting the Euro in 69% of all deals.