- SWFX market sentiment is 59% bearish
- Trader pending orders are 54% bearish
- Pair opened Monday's session at 1.0916
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Upcoming Events: Mnuchin's speech; US ISM Manufacturing PMI
EUR/USD opened in the red zone as several markets were closed on Monday due to banking holidays. The pair is therefore expected to remain somewhat flat – at least until Mnuchin's speech and the Manufacturing PMI data release. The pair closed the week volatile but managed to calm down and close up Bollinger Bands, adding levels on top of levels for traders to watch. With supply struggling against demand, it remains largely unclear what directional risks will prevail.
The US economy expanded at its weakest pace since the Q1 of 2014 in the three-month period to March, as consumer spending barely rose; however, a rise in business investment and improving pay growth held out hopes that the economy would regain momentum in the upcoming quarters. The Department of Commerce reported on Friday that the economy grew at a 0.7% annual pace in the Q1, following the preceding quarter's 2.1% and falling behind expectations for a 1.3% climb. The March quarter growth raised doubts over the Trump administration's ability to boost GDP growth and deliver economic reforms. Consumer spending, the largest contributor to US economic growth, advanced just 0.3%, the weakest since 2009. The Q1 economic slowdown was partially driven by the unusually warm weather, high volatility in inventories and the strong US Dollar. However, Friday's data showed a pickup in both wage and business investment growth. Therefore, analysts suggest that economic growth will likely rebound in the upcoming months. Moreover, the report showed a jump in inflation that would probably please the Federal Reserve and force it to raise rates at a quicker than expected pace. The next interest rate hike is largely expected to come in June.
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Upcoming events: US ISM Manufacturing PMI
With banking holidays in several countries around the world leading the fundamental trend on Monday, EUR/USD is expected to remain calm, aside from one impactful data release in the United States. The ISM Manufacturing PMI is coming out at 15:00 GMT, and could stir up some volatility following Mnuchin's speech at 12:45 GMT.
Read More: Fundamental Analysis
EUR/USD leaps from above
EUR/USD opened in the red zone on the daily chart, showing a solid downward movement just after it had opened significantly above Friday's closing price. The motion is currently being cut by the weekly Pivot Point at 1.0890, but the area might not be enough to keep the cross above Friday's opening price. The next potential target could be 1.0856, the upper boundary of the hourly unconfirmed channel with the 200-hour SMA at 1.0837 coming up next. In case the motion reverses, 1.0888 could come into play on the upside.
Daily chart
The hourly chart shows the Euro flirting with the weekly Pivot Point against the US Dollar as it is simultaneously respecting several other levels as well. The pair has been trading around a cluster and appears to be failing to post any kind of movement outside of the pressured area, which leads us to lean in favour of lower volatility over today's trading session. The scenario is also supported by closed markets around the globe, and stems from the lack of trading volumes.Hourly chart
Read More: Technical Analysis
Market sentiment strongly bearish
SWFX traders remain bearish, as 59% of open positions are short, and 54% of trader set up orders are to sell the Euro.
OANDA traders remain bearish, as 61.47% of trader open positions are short on Monday, compared to 62.10% previously. Moreover, SAXO bank clients also remain bearish, as 62.93% of open positions are short, compared to the 61.94% positions on Friday.
Spreads (avg, pip) / Trading volume / Volatility
Average forecast says EUR/USD will trade around 1.085 by August
© Dukascopy Bank SATraders, who were questioned on their longer-term views on EUR/USD between April 1 and May 1 expect, on average, the currency pair to trade around 1.085 early August. In general, 60% (+3%) of participants believe the exchange rate will be above 1.08 in ninety days, and 24% (+1%) see it above 1.12. In the meantime, 7% of those surveyed reckon the pair will be at parity or below.