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EUR/USD Little Changed as Eurozone Economic Sentiment Improves

EUR/USD Little Changed as Eurozone Economic Sentiment Improves

Oded Shimoni, Junior Currency Analyst

Talking Points:

- The Euro was little changed versus other major currencies

- Eurozone economic sentiment prints 103.9 vs 103.4 expected

- Marked improvement in services confidence printing 11.5 vs 9.6 prior

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The Euro was little changed versus other major currencies (at the time this report was written) after today's Eurozone economic confidence figures came above expectations, marking the first uptick after three consecutive months of decline. The Economic Sentiment Indicator rose to 103.6, above the expected 103.4 figure, and the prior reading of 103.0. The index is compiled from five different indicator surveys including: industrial, services, consumer, retail, and construction.

The report said that the increase in euro-area sentiment resulted from improvements in confidence among consumers, and in all business sectors except retail trade, where confidence decreased slightly.

Sentiment in the services sector increased to 11.5 in April from the prior 9.6, which was above the expected 10.0 print. Measures for industrial confidence rose to -3.7 from the prior -4.2, beating the expected -4.0 figure, on the basis of managers’ more optimistic production expectations.

In the context of the ECB stimulus efforts, it may be interesting to point out that the report said selling price expectations increased in industry, retail trade and construction, while they remained broadly stable in services. Consumer price expectations picked up as well, while consumer confidence showed a slight pickup resulting from more positive assessments of the future general economic situation, with the report pointing out that only consumer’s savings expectations deteriorated.

As was mentioned today by DailyFX Currency Strategist Ilya Spivak, ECB President Mario Draghi argued after last week’s rate decision that the bank will need more time to assess the impact of stimulus expansion unveiled in March before committing to further actions, meaning the ECB is likely to remain in wait-and-see mode for a while. With this in mind, the confidence figures today may have had little impact on markets perception on possibility for further ECB measures, and the Euro was unfazed versus other majors.

The DailyFX Speculative Sentiment Index (SSI) is showing a reading of about -2.0 at the time of writing, meaning that for every trader long the EUR/USD, there are about 2 on the short side. The SSI is a contrarian indicator, implying further EUR/USD strength.

You can find more info about the DailyFX SSI indicator here.

EUR/USD 5-Minute Chart: April 28, 2016

--- Written by Oded Shimoni, DailyFX Research

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.