• The relentless dollar buying phase finally ends
  • EUR rebounded but spotted with a double top

FX traders focus on central banks statements scheduled this week. Market participants expect the Fed will raise the interest rates besides, European central bank remains more cautious.

Review:

Flash Germany PMI Composite Output Index at 55.1 (52.8 in September). 3-month high.

Flash Germany Services PMI Activity Index at 54.1 (50.9 in September). 3-month high.

Flash Eurozone Services PMI Activity Index at 53.5 (52.2 in September). Nine-month high.

Flash Eurozone Manufacturing PMI at 53.3 (52.6 in September). 30-month high

The Ifo Business Climate Index rose from 109.5 points in September to 110.5 points in October.

Spanish unemployment for the first time fell below 20.00

Germany consumer prices are expected to increase by 0.2% on September 2016.

U.S Real GDP increased at an annual rate of 2.9 percent in the third quarter of 2016

Germany Retail turnover in September 2016 plummets

Euro area annual inflation is expected to be 0.5% in October 2016, up from 0.4% in September 2016

Seasonally adjusted GDP rose by 0.3% in the euro area and by 0.4% in the EU during the 3Q of 2016

Preview:

During this week, lack of high impact of euro economic events participants focuses on Fed statement and BOE policy meeting

US Treasury chief economist Dynan: US GDP growth in the coming quarters material sound; the job market remains strong, economic growth in the second half warming.

Atlanta Fed GDPNow Model: US third-quarter GDP growth was estimated at 2.1%, the fourth quarter GDP growth estimated at 2.7%.

Nomura FX positioning index reported to their clients

EUR: Leveraged funds’ net short positioning in EUR fell (to 61% vs. 69% last week). The highest level of net short positioning in the last year stands at 75%, which was last seen in August. Asset managers’ net long positioning in EUR fell on the week to 13% vs. 18% last week.

ANZ reported CFTC speculative positioning:

EUR saw the largest selling against the USD for the second straight week as expectations rose of an extension of the ECB’s QE program in December. Overall net short EUR positions rose by USD1.5bn to USD20.6bn, the highest since April 2015.

Leveraged funds were net buyers of USD for the fifth consecutive week, albeit at a more modest pace. Overall net long USD positions increased by USD1.2bn to USD23.1bn, the highest since January 2016.

Technical view:

As we forecast on last week’s article the price rebounds from 1.0850-1.0990 levels.

But spotted with a double top, fails at 1.10 and remains below 20Dsma.

Support: 1.0930, 1.0880-1.0850 and 1.0800

Resistance: 1.1000, 1.1050-1.1060 and 1.1100

Near-term resistance seems at 1.10/1.1010 break this 1.1050/1.1060 exists. A daily close above 1.1070 may retrace to 1.11 and 1.1130 levels.

Alternatively, support zone remains between 1.0850-1.0800 levels. Fails at 1.08 may retrace downward to 1.07 and 1.06 levels.

The current rebound is technically triggered on an ongoing downtrend.