EUR/USD Remains Under Pressure Despite Upbeat Euro-Zone GDP
- Euro-Zone growth continues to pick-up.
- EUR/USD is being steered lower by a strong US dollar complex ahead of US NFP data and next week’s FOMC meeting.
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EUR/USD remained under pressure Thursday, despite figures confirming robust third quarter Euro-Zone growth. Seasonally adjusted GDP rose by 0.6% in both the euro area and the EU28 during the third quarter of 2017, compared with the previous quarter, according to an estimate published by Eurostat. In the second quarter of 2017, GDP grew by 0.7% in both areas. Compared with the same quarter of the previous year, seasonally adjusted GDP rose by 2.6% in both the euro area and the EU28 – beating expectations of 2.5% - after +2.4% in both zones in the second quarter of 2017.
Despite better-than-expected growth, EUR/USD continues to point South as a resurgent USD leads the pair. On the charts the November 21 low at 1.17150 remains in sight followed by 1.15750 and 1.15550. With a 0.25% fed fund hike fully priced in at next week’s FOMC meeting, traders will be closely watching the Fed Dot Plot for updated forecasts of interest rate hikes in 2018. Ahead of this meeting, the monthly US non-farm payroll data will be released Friday with +195k jobs expected to have been created. DailyFX analysts’ @CvecchioFX and @DavidJSong will be covering the jobs report live from 13:15pm on Friday. You can join them here.
Chart: EURUSD Four Hour Time Frame (November 15 – December 7, 2017)
IG Client Sentiment data show 41.4% of traders are net-long with the ratio of traders short to long at 1.41 to 1. The number of traders net-long is 7.0% higher than yesterday and 10.6% higher from last week, while the number of traders net-short is 6.3% higher than yesterday and 0.9% lower from last week. We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EURUSD prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current EURUSD price trend may soon reverse lower despite the fact traders remain net-short.
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--- Written by Nick Cawley, Analyst
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.