- The share of sell orders inched down from 59 to 56%
- 66% of all open positions are long
- Immediate resistance is at 1.2251
- The closest support is around 1.2150
- Upcoming Events: US Initial Jobless Claims, US Goods Trade Balance, US Crude Oil Inventories
US pending home sales dropped unexpectedly last month to the lowest level since January 2016, official figures revealed on Wednesday. The National Association of Realtors reported its Pending Home Sales Index fell a seasonally adjusted 2.5% to 107.3 in November, following the preceding month's rise of 0.1% to 110.0 points, while market analysts anticipated a slight acceleration of 0.5% during the reported period. On an annual basis, the Index declined at an annualized pace of 0.4%. In regional terms, sales jumped 0.6% in the Northeast, but dropped 2.5% in the Midwest, 6.7% in the West and 1.2% in the South during November. According to NAR Chief Economist Larry Yun, the sharp rise in mortgages rates and shortages on the housing market were the main driver of the decline last month.
As a result, the EUR/USD pair fell to 1.0394 from 1.0398 ahead of the release, while the GBP/USD declined to 1.2210 from 1.2217. Meanwhile, the US Dollar Index, which tracks the Greenback's performance against a group of six other currencies, remained unchanged at 103.67.
Relatively quiet end of the year
On Thursday attention could be paid to the US Initial Jobless Claims. They are a measure of the number of people filing first-time claims for state unemployment insurance. In other words, it provides a measure of strength in the labor market. A larger than expected number indicates weakness in this market, which influences the strength and direction of the US economy. Another possible event will be the Crude Oil Inventories. It is a weekly measure of the change in the number of barrels in stock of crude oil and its derivates. This report tends to generate large price volatility, as oil prices impact on worldwide economies, affecting the most, commodity related currencies, such as Canadian Dollar. Despite it having a limited impact among currencies, this report tends to affect the price of oil itself, and, therefore, have a more notorious impact on WTI crude futures.
GBP/USD in tight range between 1.22 and 1.23
Wednesday ended with the British Pound weakening against the US Dollar again, this time piercing the monthly S1. However, the second target remained untouched, as volatility was limited by the 1.22 and the 1.23 major levels. Even though technical indicators keep giving bearish signals today, the 1.22 mark could still hold and prevent the Cable from falling deeper down, also being reinforced by the monthly S1. The monthly S1 is now unlikely to be reliable, thus, the Sterling has the potential to negate yesterday's losses and edge closer to the 1.23 mark once more.
Daily chart
No major changes occurred over the last 24 hours, with the Cable remaining in a bearish trend. The hourly chart somewhat supports the outlook of the situation on the daily one, as here the 1.23 major level is reinforced by the 200-hour SMA, implying that a surge beyond this area is highly unlikely.
Hourly chart
Traders mostly bullish
Market sentiment remains bullish, with 66% of all open positions being long today (previously 65%). Meanwhile, the share of sell orders inched down, namely from 59 to 56%.
A similar situation is observed elsewhere. For example, 61% of positions open at OANDA are currently long. This is more than the share of shorts (39%), more than sufficient for the sentiment to be called bullish. Similarly, sentiment at Saxo Bank is also bullish, with 64% of traders being long and 46% being short the Sterling against the US Dollar.
Spreads (avg, pip) / Trading volume / Volatility
Traders expect the Cable to keep falling
By the end of the next three months traders expect the Cable to fall under the 1.26 major level, as 58% of survey participants believe so. While the current price is around 1.23, the average forecast for March 29 is around 1.25. However, the 1.16-1.18 interval is now the most popular one, having 16% of the votes, while on the second place are the 1.18-1.20, the 1.22-1.24 and the 1.28-1.30 price ranges, with 12% of poll participants choosing each of them.