- SWFX market sentiment is 61% bullish
- Trader pending orders are 60% to sell
- Pair opened Wednesday's session at the 1.0887 level
- Aggregate daily technical indicators bet EUR/USD will fall
- Economic events to watch over the next 24 hours: GfK German Consumer Climate; German Import Prices; Italian Retail Sales; US Goods Trade Balance; US Prelim Wholesale Inventories; US Flash Services PMI; US New Home Sales
German business sentiment improved unexpectedly in October, reaching its highest since April 2014, a private survey showed on Tuesday. According to the Munich-based Ifo Institute, the Business Climate Index, which is based on a monthly survey of some 7,000 firms, jumped to 110.5 points on a monthly seasonally adjusted basis in October, following the preceding month's 109.5 and surpassing the 109.6 market forecast. The increase in the headline Index was mainly driven by the sentiment improvement in the manufacturing and construction sectors. According to the Ifo's subsurvey, the Current Assessment Index, which measures current conditions in the Euro zone's largest economy, came in at 115.0 in October, up from September's 114.7 points, whereas analysts anticipated a slight increase to 114.9. Furthermore, the Business Expectations Index, which indicates companies' outlook for the next six months, advanced to 106.1 in the same month, compared to the previous month's 104.5 and forecasts for a reading of 104.5 points. The German economy is widely expected to lose some of its steam in the Q3, after growing 0.7% in the Q1 and 0.4% in the Q2. The Euro rose against the US Dollar to 1.0880 from 1.0875 ahead of the release.
American consumers were more pessimistic about the path of the economy in October, according to latest survey results published on Tuesday. The Conference Board's Consumer Confidence Index dropped unexpectedly to 98.6 points in October, following the prior month's 104.1, the best level since 2007, while market analysts anticipated a milder decrease to 101.5 during the reported period. The Present Situation Index fell to 120.6 from 127.9 in the tenth month of the year, while the Expectations Index dropped to 83.9 from 87.2 registered last month. Furthermore, the share of respondents expecting more jobs in the upcoming months declined to 13.1% from September's 15.7%, whereas the percentage of those expecting incomes to rise remained unchanged at 17.5% in October. Nevertheless, the share of respondents expecting fewer jobs fell to 17.0% from 18.1% seen in September, as well the percentage of those expecting incomes to drop to 9.8% from the previous month's 10.4%.
Upcoming fundamentals: Loads of various data from both sides
The next 24 hours have a strange tendency to have scheduled a lot of data releases, but all of them are minor and will most likely just give insight into the general situation of the mentioned economies. First of all at 6:00 GMT the GfK German Consumer Climate is set to be released. Afterwards, with an hourly interval two more EU data publications are scheduled, as German Import Prices and Italian Retail Sales will be available at 7:00 and 8:00 GMT. In the second part of the day minor data from the US will be published, as at 12:30 GMT US Goods Trade Balance and Preliminary Wholesale Inventories will be available. Afterwards, at 13:$5 GMT the US Flash Services PMI will be out. Last but not least, the US New Home Sales are set to be released at 14:00 GMT.
EUR/USD breaks out of deadlock
Daily chart: Although the bullion remained almost unchanged on Wednesday morning, the yellow metal broke out of the deadlock and became once more at least slightly volatile by the end of Tuesday's trading. Yesterday's session was ended higher, as the currency exchange rate was at 1.0888 on midnight. As the commodity price was almost unchanged on Wednesday morning, it had been more volatile to the downside. Moreover, daily aggregate technical indicators forecast a fall of the pair by the end of the session. These factors combined are in favor of a fall of the Euro against the Greenback.Daily chart
Hourly chart: The hourly chart gives more insight into the rates movements, as it can be seen, when the volatility picked up. It began at 9:00 GMT, when the pair increased volatility on the German fundamental data and hit the upper Bollinger band. Afterwards, the currency exchange rate began to fall and fell by bending the lower band until 14:00 GMT, when the rate suddenly spiked back up to the previous levels. Most recently the rate resumed trading almost flat. However, the 100-hour SMA is approaching from the upside and might push the Euro lower.
Hourly chart
SWFX traders increase bullish positions
SWFX traders have increased their bullishness after three consecutive sessions of stagnation, as on Wednesday 61% of open positions are long, compared to the previous 59%. In the meantime, 60% of pending commands remain set up to sell the Euro.
OANDA traders remain bullish on Wednesday, as 63.41% of open EUR/USD positions are long. Meanwhile, SAXO Bank clients have slightly decreased their bullish sentiment, as open long positions now add up to 51.63%, compared to 53.62% during the previous trading session.