EUR/USD falls below 1.12

Note: This section contains information in English only.
Source: Dukascopy Bank SA
  • SWFX market sentiment is 57% bearish
  • Trader pending orders are 58% to sell
  • Pair opened Tuesday's session at the 1.1211 level
  • Aggregate daily technical indicators bet EUR/USD will surge
  • Economic events to watch over the next 24 hours: Spanish Unemployment Change; EU PPI
The common European currency failed to surge against the US Dollar on Monday, and the rate began a fall which was prolonged into Tuesday. The currency exchange rate had reached above the 1.1230 level on Monday, and the outlook indicated at a surge of the Euro against the Greenback. However, in just two hours the rate retreated below the support cluster made up of the recently formed weekly and monthly pivot points at 1.1230 and 1.1224. On Tuesday morning the situation looked grim for the Euro, as the pair was set to fall to at least 1.1180.

Manufacturing activity in the United States rebounded in September after a disappointing August report, official data showed on Monday. The Institute for Supply Management said its Index of manufacturing activity advanced to 51.5 in September, following the previous month's 49.4, while market analysts pencilled in a 1.0 point-acceleration to 50.4 in the reported month. Back in August, manufacturing output contracted for the first time since February of this year, as only six out of 18 industries reported growth. A number below 50 points indicates contraction in the US manufacturing sector, while a number above indicates improving conditions. Furthermore, the New Orders Index rose to 55.1 the Employment Index jumped to 49.7 in September from last month's 49.1 and 48.3, respectively, while the Price Paid Index remained unchanged at 53.0, in line with analysts' expectations. The data indicated that nine of the 18 industries reported a rise in new orders, while 10 of the 18 industries reported an increase in production last month. After the release, the US Dollar rose against other major currencies, trading at 1.1217 against the Euro, 1.2833 against the Sterling and 101.44 against the Japanese Yen. Meanwhile, the US Dollar Index rose 0.25% to 95.694.

Consumer prices in the Euro zone increased last month, official data showed on Friday. According to Eurostat's preliminary reading, the annual Consumer Price Index in the region advanced 0.4% in September, following to the preceding month's 0.2% and meeting analysts' expectations. Meanwhile, the so-called core CPI, which excludes food, energy, alcohol and tobacco, rose 0.8% in the reported month, unchanged from the previous month's reading, whereas economic desks anticipated a slight acceleration to 0.9%. Prices of food, alcohol and tobacco jumped 0.7% in the ninth month of the year, following August's rise of 1.3%, while prices of services and 1.2%, slightly up from the previous month's 1.1%. Non-energy industrial goods prices accelerated 0.3%, unchanged from August, whereas the price of energy declined 3.0% in September, following the prior month's 5.6% fall. The Euro zone seasonally adjusted unemployment rate was 10.1% in August, in line with July's reading but down from 10.7% seen in the same month year ago. Other data released by Federal Statistics Office showed that Germany's retail sales increased 3.7% on an annual basis and dropped 0.4% in August. The July figure was revised down to a gain of 0.5% from the originally reported rise of 1.7%.

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Upcoming fundamentals: Spanish unemployment and EU PPI

After the large influx of data on Monday from both sides of the Atlantic, Tuesday is set to be a quiet day for fundamentals. During Tuesday's trading session two minor data releases are set to occur in the EU. First will be the Spanish Unemployment Change at 7:00 GMT. Secondly, the EU PPI monthly change will be published at 9:00 GMT.



EUR/USD below 1.12 on Tuesday morning

Daily chart: The common European currency fell below the 1.12 mark on Tuesday morning against the Greenback. The fall occurs due to the fact that the currency exchange rate did not manage to break the resistance cluster made up of the recently formed weekly and monthly pivot points respectively at 1.1224 and 1.1230 levels. At the moment, it is most likely that the currency pair will move lower, as the closest support is located near the 1.1180 level, where the 55 and 100-day SMAs are located at. Although, daily aggregate technical indicators forecast a surge of the pair by the end of the day.

Daily chart
© Dukascopy Bank SA

Hourly chart: The hourly chart for EUR/USD shows that the currency exchange found support in the monthly PP at 1.1230 and began a surge on Monday morning. However, at 11:00 GMT the currency pair began to fall, and the decline of the rate was not hindered until 15:00 GMT, when the pair encountered a combined cluster of all the SMAs from 1.1220 to 1.1218. Although, by 18:00 GMT the pair resumed the gradual downward movement, which continued on Tuesday morning.

Hourly chart
© Dukascopy Bank SA


Traders remain bearish

SWFX traders remain bearish on the pair, as 57% of open positions are short on Tuesday. In the meantime, pending commands have remained unchanged, as 58% of set up orders are to sell. .


OANDA bearish trader sentiment decreased on Tuesday, as 56.06% of open positions are short. In the meantime, SAXO Bank clients have also decreased their bearish stance, as open short positions now add up to 63.14% compared to 68.34% during the previous trading session.

Spreads (avg,pip) / Trading volume / Volatility



Average forecast says EUR/USD will trade at 1.12 in January

Meanwhile, traders, who were asked about their longer-term views on EUR/USD between September 4 and October 4 expect, on average, the currency pair to trade around 1.12 by the end of December. Though 50% (+3%) of participants believe the exchange rate will be generally above 1.12 in ninety days, with 20% (+1%) alone seeing it above 1.18. Alongside, 42% (-3%) of those surveyed reckon the price will trade below 1.10 in three months.

© Dukascopy Bank SA

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