- SWFX market sentiment is 53% bearish
- Pending commands in the 100-pip range 62% long
- Pair opened Tuesday's session at the 1.1310 level
- Aggregate daily technical indicators bet EUR/USD will appreciate
- Economic events to watch over the next 24 hours: German Constitutional Court Rulling; ZEW Survey (June); Fed's Yellen Testifies; ECB President Draghi Speaks
The final estimate of the single European region inflation in May showed that consumer prices plunged 0.1% on a yearly pace in May, having slowed its pace of decrease after April's steep drop of 0.2%. Meanwhile, this was the second consecutive decline in prices. From April to May period, the CPI, in turn, added at a pace of 0.4%, quicker than the 0.3% forecasted. The final data was in line with flash estimate released on May 31. The core CPI data was at an annualized growth rate of 0.8%, hire compared to the April reading of 0.7%. On a monthly pace, core CPI added 0.2% versus the 0% increase in April. In the meantime, the EU's statistics agency highlighted that restaurants, rents and tobacco prices push inflation higher while fuel, heating oil and gas, in contrast, had the negative impact. The negative interest rate within the Euro zone region has failed to preserve hopes of inflation, despite President Mario Draghi statements that he and other senior bank officials are convinced that the measures are working. It is worth to point out, that inflation has remained in negative territory during the first half of 2015, but after rising in the second half of the year, it has weakened again in 2016.
As reported by the US Census Bureau, there were 1.164 million constructions of residential buildings started in the US in May. The data beat expectations of 1.15 million, while still being below the April's reading of 1.172 million. During the previous month there was a sharp increase in the construction, but a lot of homes on the market became less affordable, amid a rather sharp increase in prices for those homes. Mortgage rates, however, are at low levels, somewhat boosting demand for apartment and house acquisitions, but, nonetheless, for some prices remain too high. Single-family houses have a higher impact than apartments, as they provide a larger economic boost and they rose 0.3% up to 764,000, while apartments showed only 396,000 residences, thus, barely changed compared to the previous month's data. Furthermore, only 1.138 million building permits for construction were issued in the US last month, with the data slightly failing to meat expectations of 1.15 million. Among permits the single-family ones provided concerns, as they showed the largest monthly slowdown during the past 15 months. The permits for houses dropped 2% down to 726,000 units, while the apartment permits were at 381,000 units. This weaker data is unlikely to have a serious effect on the GDP second estimate, as it is forecasted to show signs of improvement, being driven by higher demand in household.
Upcoming fundamentals: Courts and speeches on Tuesday
On Tuesday there are various events, which will affect the EUR/USD pair. First of all the German Constitutional Court is set to publish its ruling regarding the constitutionality of the ECB's Outright Monetary Transactions policy at 8:00 GMT. Afterwards, the German ZEW survey will show the economic sentiment in Germany for June at 9:00 GMT. In the noon, at 13:00 GMT ECB President Mario Draghi is set to speak at the hearing before the Committee on Economic and Monetary Affairs of the European Parliament. In addition, Janet Yellen is also reporting in to legislators, as the chairwoman will testify before the Senate Banking Committee in Washington at 14:00 GMT.
EUR/USD at 1.1335 on Tuesday
Daily chart: The European currency was volatile during Monday's trading session, as it fluctuated between the levels of 1.1302 and 1.1383 against the US Dollar. However, in general the currency exchange rate ended Monday's trading session lower at 1.1310, than it had started the session at 1.1329. On Tuesday morning the pair surged, and it was trading at 1.1335 by 5:00 GMT. The exchange rate is approaching the weekly R1 at 1.3403, and if it passes it, then the rate will move towards the 1.1408 level of R2. From the downside, the pair is supported by the 55-day SMA at 1.1305.Daily chart
Hourly chart: On the hourly chart it can be seen, that the European Currency touched the first monthly resistance at 1.1340 against the US Dollar around 2:00 GMT on Tuesday. Afterwards the pair moved south, and at the moment it is at 1.1331. The currency exchange rate is about to meet with the 20-hour SMA just below it at 1.1326, and further below are located the 100-hour SMA with the lower Bollinger band. Average daily technical indicators forecast a surge for the pair, and in such case it is set to test the monthly R1 again.
Hourly chart
SWFX trader bearish sentiment unchanged on Tuesday
OANDA trader bearish sentiment has decreased compared to Monday, as 57.26% of open positions are short. In addition, SAXO Bank clients have decreased their bearish stance, as their open short positions are now at 61.68% compared to 62.10% on Friday.