- SWFX market sentiment is 55% bearish
- Trader pending orders are 51% bearish
- Pair opened Tuesday's session at 1.0668
- Upcoming Events: ECB President Draghi's speech
US manufacturing activity rose in line with analysts' expectations last month, a private survey revealed on Monday. The Institute for Supply Management reported its Purchasing Managers' Index for the manufacturing sector came in at 57.2 in March, down from the preceding month's 57.7. However, the figure met market forecasts. Out of the 18 industries, 17 reported growth last month. Data also showed that the sharp oil price rebound contributed most to the manufacturing sector recovery over the past several months. Nevertheless, some manufacturing companies projected activity growth to remain flat in the upcoming months. The New Orders Index came in at 64.5 points, following the February reading of 65.1. However, the gauge if new orders remained at its three-year highs, suggesting that the sector would remain on a solid growth track. Manufacturers also pointed to rising raw material prices, providing further evidence that inflationary pressures continued to build in the US economy. Meanwhile, Markit reported that the group's PMI for the US manufacturing sector dropped to 53.3 last month, the lowest in six months, compared to the prior month's 53.4, whereas analysts anticipated a slight rise to 53.5 points. Furthermore, Markit said that the New Orders Index came in at its slowest pace since October.
Thursday's data also showed consumer spending advanced 3.5% during the last quarter of 2016, up from the initially reporter 3.0% growth rate. Furthermore, domestic demand climbed 3.4% in the Q4 of 2016, the fastest pace of growth in two years, as imports posted a 9.0% jump, the biggest since the Q4 of 2014. Other data released on Thursday revealed that initial jobless claims dropped 3,000 to a seasonally adjusted 258,000 in the week ending March 25, remaining below the 300,000 level for 108 consecutive weeks.
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Upcoming events: ECB Draghi's speech
While no high impact fundamental news are due for the US Dollar, the EUR might spill some volatility into the EUR/USD currency market in case 10:30 GMT brings some surprises as ECB President Draghi speaks. Uncertainty might build before the event as well, as bulls and bears fight for gains on their expectations. The doji could, therefore remain intact until the speech.
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EUR/USD declines below 1.07 mark
Daily Chart: The daily chart displays that the pair has showed almost no movement whatsoever, shifting from a green to a red doji candle. It appears that EUR/USD has now initiated a downward motion as the redness of the small candle has become more consistent, meaning that 1.0639, representing the 23.6% Fibo retracement of the May-January downfall, might be the ultimate target for today. The scenario is in line with the strong resistance cluster above at 1.0673/85 which the rate has not been able to overstep, leading with the 55-day SMA.Daily chart
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Hourly chart: On the hourly chart, we can notice some developments that are somewhat consistent with the bearish scenario. Firstly, the latest movements have sketched a descending channel pattern after an initiated channel was broken on the upside. Similarly to the daily chart, upside risks are well capped on the hourly time-frame as well, setting immediate resistance at 1.0673/76 while the rate itself floats above the 20-hour EMA below the upper Bollinger Band. The first downside target will be met at 1.0665 and will open the way to 1.0653.
Hourly chart
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Read More: Technical Analysis
Markets with mixed views
SWFX traders remain bearish on the pair, as 55% of open positions are short on Tuesday. Similarly, 51% of trader set up orders are to sell the Euro.
OANDA traders have moved into bullish territory, as 53.67% of trader open positions are long on Tuesday, compared to 51.47% previously. SAXO bank clients have switched their pessimism to show 53.89% of open positions being long now, compared to the mostly bearish sentiment on Monday.
Spreads (avg,pip) / Trading volume / Volatility
Average forecast says EUR/USD will trade around 1.075 in July
Traders, who were questioned on their longer-term views on EUR/USD between March 4 and April 4 expect, on average, the currency pair to trade around 1.075 at the start of July. In general, 44% (+1%) of participants believe the exchange rate will be generally above 1.08 in ninety days, and 26% see it above 1.12. In the meantime, 12% of those surveyed reckon the pair will be at parity or below. © Dukascopy Bank SA