- SWFX market sentiment is 53% bearish
- Trader pending orders are 57% to sell
- Pair opened Wednesday's session at 1.0603
- Upcoming Events: US CPI; US Core CPI; US Retail Sales; US Core Retail Sales; Federal Funds Rate; FOMC Economic Projections; FOMC Statement; FOMC Press Conference
The European Central Bank Mario Draghi did not provide any news in terms of monetary policy during his speech on Monday. Back on Friday, sources close to the ECB, reported that policymakers discussed the possibility of raising interest rates before the end of asset purchases but the discussion was brief and light. However, the Euro managed to rise against other major currencies on rate hike rumors. In his speech, Mario Draghi mainly focused on productivity growth in the Euro zone, which, according to him, slowed markedly over the last several years. Draghi suggested that if the non-hightech sector adopts more innovative technology that would provide sufficient support to productivity growth in the region, adding that higher productivity growth is important for the European socioeconomic model that includes higher wages and a greater degree of social protection.
The ECB President also highlighted the benefits of investment in intangible assets, such as R&D, claiming that companies, which invested in intangibles, reflected greater ability to innovate and adopt technologies. Draghi also urged companies to make greater investment in human capital and management, to improve their productivity. Analysts suggest that the ECB is likely to keep its policy unchanged until the end of its QE programme, or March 2018.
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Upcoming events: US data set and the Fed
On Wednesday there are two times that market participants should look at the fundamentals. First of all at 12:30 GMT there will be a publication of US data, which will be covered by the Dukascopy research team. The package will consist of the US CPI, Core CPI, Retail Sales and Core Retail Sales. However, the main event of the month will occur at 18:00 GMT, as the Federal Reserve will announce the Federal Funds Rate and publish the FOMC Statement with the FOMC Economic Projections. Afterwards, at 18:30 GMT, the FOMC Press Conference will be held.
Read More: Fundamental Analysis
EUR/USD near 1.06 mark on Wednesday
Daily Chart: On Wednesday morning the common European currency was squeezed in by two simple moving averages against the US Dollar just above the 1.06 level. The 20-day SMA was providing support from the downside at 1.0604 level, and the 55-day SMA was putting up resistance to the currency exchange rate at 1.0621 level. It is most likely that the support level will be passed and the rate will continue lower to the first weekly support level, which is located at the 1.0566 mark. Such a move would be consistent with the Federal Reserve announcing a rate hike later in the day.Daily chart
© Dukascopy Bank SA
Hourly chart: The hourly chart shows that there is no short term pattern. The rate's movements are dictated by the fundamental bias, as even the Bollinger bands are being bent and are not showing enough force to change the currency pair's movement. However, one noticeable fact has changed. The 200-hour SMA at 1.0599 has come into a close enough range to begin providing significant support to the currency exchange rate.
Hourly chart
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Read More: Technical Analysis
Markets remain bearish
SWFX trader sentiment remains unchanged, as 53% of open positions remains short. Meanwhile, 57% of trader set up orders are set to sell.
OANDA traders have become almost neutral, as 51.17% of trader open positions are short on Wednesday, compared to 53.19% short positions previously. Meanwhile, SAXO bank clients are on the bearish side, as 52.56% of open positions are short, compared to 54.79% on Tuesday.
Spreads (avg,pip) / Trading volume / Volatility
Average forecast says EUR/USD will trade around 1.06 in April
Traders, who were questioned on their longer-term views on EUR/USD between February 15 and March 15 expect, on average, the currency pair to trade around 1.06 by the start of April. In general, 56% (+6%) of participants believe the exchange rate will be generally above 1.06 in ninety days, and 14% (+2%) see it above 1.12. In the meantime, 20% (-1%) of those surveyed reckon the pair will be at parity or below. © Dukascopy Bank SA