- SWFX market sentiment is 54% bullish
- Trader pending orders are 60% to sell
- Pair opened Tuesday's session at 1.0763
- Upcoming Events: US Existing Home Sales; German Ifo Business Climate
As markets expected, the European Central Bank left its monetary policy unchanged at its January meeting on Thursday. Following the policy meeting, the ECB President Mario Draghi said the Euro zone's economic recovery remained subdued. Moreover, the ECB President stated at the post-meeting press conference that the region's economic growth is unlikely to gain momentum in the upcoming months due to the slow pace of structural reforms. According to Draghi, fiscal policies should also support the Euro zone's economic recovery within the European Commission's system of rules. The headline inflation rate is expected to rise more in the short-term, driven by higher energy prices. In the meantime, the Central bank said that underlying inflationary pressures in the region remained benign. However, the ECB expressed hopes for an increase in core inflation over the medium term. The EUR/USD pair hit its daily low of $1.0607, following Draghi's comments on inflation. The Central bank pointed to an uptick in manufacturing activity and rising confidence indicators. Nevertheless, it signaled it was ready to provide additional monetary stimulus if economic conditions worsen.
Back in December, the Bank cut its monthly asset purchases to 60 billion euros but extended the QE program by six months until at least March 2017.
Upcoming events: US home sales and German business climate
During the next 24 hours traders can keep a lookout for two minor impact data releases, which might cause short term volatility, if the released data heavily differs from the average market forecasts. First of all it will be the US Existing Home Sales at 15:00 GMT. Secondly, in the EU, to be precise Germany, the German Ifo Business Climate will be published at 9:00 GMT.
EUR/USD retreats on Tuesday
Daily Chart: During the early hours of Tuesday's trading session the common European currency began a decline against the US Dollar. However, it was already expected to occur. The forecast for the currency exchange rate remains the same. The Euro is set to depreciate against the Greenback to at least the weekly PP, which is located at 1.0666. In addition, it is possible that the rate moves as low as 1.0613, where the weekly S1 is located at. Afterwards, a rebound is most likely set to occur, and the pair will continue its way in accordance with the medium term ascending channel pattern.Daily chart
Hourly chart: The hourly chart offers an excellent opportunity for traders to exactly pinpoint the spot, where the currency exchange rate changed its direction above the weekly R1. That point is the 1.0773 mark at 22:00 GMT on January 23. This point can be used in further analysis in various ways. However, in the framework of this analysis it is used to adjust the medium term ascending channel pattern's borders.
Hourly chart
SWFX traders remain firmly bullish
Traders remain bearish regarding the Euro, as 54% of open positions are short. In the meantime, 60% of trader set up orders are to sell.
OANDA traders increased their bearish outlook, regarding the pair, as 56.04% of open EUR/USD positions were short on Tuesday, compared to 54.36% on Monday. Meanwhile, SAXO bank traders increased their bearish outlook, as 63.34% of open positions were short, compared to 61.91% previously.