- SWFX market sentiment is 65% bullish (+1%)
- 70% of pending orders in 100-pip range are to SELL the Euro
- Upcoming fundamental events: Euro zone's Preliminary Flash GDP q/q, US ADP Non-Farm Employment Change, FOMC Statement, Federal Funds Rate
The common European currency fell to a new five-month low early on Wednesday, thus testing a short-term trend-line.
The Greenback weakened against the Eurozone's single currency, following the US Advance GDP data release on Friday. The EUR/USD currency pair gained almost nothing, to continue fluctuating in the 1.2385 area.
The Bureau of Economic Analysis released Advance Gross Domestic Product data for Q1 2018, but despite the fact that the data came out better-than-expected of 2.3%, compared to the 2.0% estimate, the EUR/USD currency pair moved upwards after bouncing a little bit lower at the moment of the report. The move upwards may be caused by the fact that in the previous quarter Advance GDP data was 2.6%, which was about 0.3% higher than in the latest quarter.
FOMC dominates fundamentals
The main fundamental event in this session is the FOMC Monetary Policy Statement and the Federal Funds Rate at 1800GMT. A rate hike is not expected to occur today; so any deviation from this assumption is very likely to cause big fluctuations in the market.
Meanwhile, some other data releases are scheduled during the first part of the day, including the Euro zone's Preliminary Flash GDP for 1QY2018 and the ADP Non-Farm Employment Change published at 0900GMT and 1215GMT, respectively.
EUR/USD should finally edge higher
The strong downside potential which has guided the EUR/USD exchange rate since mid-April remained dominant on Tuesday, as well. The Euro plunged 91 pips against its American counterpart during the first part of the day, while the evening and this morning introduced no changes to the pair's positioning.The aforementioned fall was stopped by a dashed short-term trend-line at 1.9920. Technical indicators are already pushing higher from historic lows, thus suggesting that the previously-expected recovery should finally occur today.
The closest resistance is set by the 61.80% Fibonacci retracement and the weekly S1 at 1.2035; however, the possibility of the pair appreciating until the 55– and 100-hour SMAs at 1.2090 should not likewise be excluded. Support is provided by the weekly S1 at 1.1950.
Hourly Chart
Last week brought major losses for the Euro as a result of which it plunged by 2.18% against the Greenback. Along the way, the 100-day SMA, the weekly PP and the 50.0% Fibonacci retracement were breached circa 1.22.
Some downside potential is still apparent in the market this week, with the nearest support being formed by the weekly S2 and the 200-day SMA at 1.20. Even if the pair falls down to this cluster, a movement south is unlikely to follow. Instead, the Pound should re-approach the 1.22 territory.
Daily Chart
Bulls grow stronger
EUR/USD remains strongly bullish with 65% of open positions being long (+1%).
The outlook for the two currencies against the rest of the traded financial instruments is as follows: the Euro is 52% bullish and the US Dollar is 60% bearish.
The market sentiment of OANDA remains bearish today, as 51% of its traders are holding short positions. Saxo Bank clients are also bearish with 55% of open positions being short (-2%).
Spreads (avg, pip) / Trading volume / Volatility