- Long traders raised their share from 43% to 44%; broader sentiment remains Euro-negative
- Only 39% of all pending orders are set to acquire the Euro in 100-pip range from the spot
- Expectations are pessimistic, as long as 55-day SMA at 1.0984 remains untouched
- Daily technical indicators deteriorated and expect more losses from EUR/USD
- Economic events to watch in the next 24 hours: French Trade Balance (Oct); Euro zone Revised GDP (Q3); US JOLTS Job Openings (Oct)
Industrial production in Germany, the Euro zone's biggest economy, increased in October following two months of decreases. According to the German Federal Statistical Office, industrial output, which makes up almost a third of the German economy, climbed 0.2% in the reported month, after the 1.1% decline in September. In annual terms, production posted no change in October, compared with a revised 0.4% gain in the preceding month. A separate report showed industrial orders in the Euro zone's powerhouse surged 1.8% in October, measured on a monthly and seasonally adjusted basis. Meanwhile, Euro zone investor confidence rose for a second consecutive month in December to the highest level in four months, largely due to the ECB's decision to introduce more stimulus to support the region's economy. The Sentix investor confidence index climbed to 15.7 from 15.1 in November. However, economists had predicted a higher score of 17. The current conditions index of the survey fell in December, after a surge in the previous month. The measure dropped to 13.5 from 16. Meanwhile, the expectations index jumped to 18 from 14.3. The measure improved for a second consecutive month.
China's exports dropped more than expected in November, while decline in imports slowed, a sign that domestic demand started to recover slowly. Exports plunged 6.8% in November from a year earlier, falling for a fifth consecutive month. At the same time, imports plummeted 8.7% over the same period, according to China's General Administration of Customs. As a result, trade surplus shrank to $54.1 million from the record high of $61.64 million last month. Back in October, exports had dipped by 6.9% from a year earlier, while imports had tumbled 18.8%. Chinese growth slowed to 6.9% in the third quarter, sliding below the 7% mark for the first time since the global financial crisis of 2008-2009, sparking concerns of a hard landing in the world's second largest economy after years of explosive growth. President Xi Jingping said in November the nation's economic growth rate would not be less than 6.5% in the five years to 2020. To boost the economy, the People's Bank of China has repeatedly lowered interest rate and devalued the Yuan against the US Dollar this year. China is widely expected to record its slowest economic growth in a quarter of a century this year as activity is weighed down by sluggish domestic and foreign demand, factory overcapacity, high debt levels and cooling investment.
Upcoming fundamentals: Calm Tuesday to be a successor of calm Monday
For EUR/USD, the fundamental front is expected to remain silent on Tuesday for the second day in a row. There are few data releases due in Europe or the US in the next 24 hours, which are fairly unlikely to move the foreign exchange market a lot. The French trade balance data is awaited at 7:45 GMT, which will be accompanied by the Fifth Republic's government budget numbers for October. The Euro area's GDP is estimated to grow by 0.3% in the third quarter, no change from the preliminary projection. Some market impact may come from the JOLTS data on job openings in the US. This is a leading indicator of overall employment in the country, and this time the reading is forecasted to pick up from 5.53 million in September to 5.59 million in October, reflecting positive employment numbers we had received earlier last week and in the preceding month.
EUR/USD is committed to penetrating 1.08
EUR/USD still continues to absorb a substantial rally of the previous week. There is more room for a rise up to the 55-day SMA at 1.0984 in the nearest future. However, the broader outlook favours the bearish scenario for the moment. We see 1.08 as the main goal of the short traders, which is represented by July low and weekly pivot point. Failure here would imply extra downside move in the direction of the monthly pivot point at 1.0724 and eventually the April low at 1.0519. Meanwhile, trading volume tumbled yesterday, meaning market volatility is likely to be reduced.Daily chart
While the EUR/USD currency pair keeps correcting lower in the one-hour chart, the spread between the spot and 200-hour SMA has narrowed from 200 pips yesterday down to 165 pips by Tuesday morning. The moving average will attempt to underpin the Euro in the next few days, but risks of a drop below it are not off the table.
Hourly chart
Bulls are unable to commence any major U-turn so far
Traders in both OANDA and SAXO Bank markets continue to preserve their bearish views with respect to the EUR/USD currency pair. OANDA clients are short on EUR/USD in 58.44% of all cases on Tuesday, while more than 66% SAXO Bank market participants foresee the Euro dipping down in the foreseeable future.