- SWFX market sentiment is 54% bearish
- Pending commands in the 50-pip range are bearish (58%)
- Pair is falling at 1.1356, as US Dollar recoups losses
- Aggregate daily technical indicators bet EUR/USD will remain unchanged
- Economic events to watch over the next 24 hours: German Factory Orders (April); Fed's Rosengren speech; ECB's Constancio speech; ECB's Coeure speech; US Labor Market Conditions Index; ECB's Angeloni Speaks; Fed Chair Janet Yellen speech.
The latest release on business growth in the single currency remained soft for the previous month, showing undoubted evidence that the strong expansion at the beginning of the year has already lost its pace. Also, ultra-loose monetary policy rate left unchanged by the European Central Bank on Thursday is pushing companies still cut its prices in May, as they have done for at least five years. Meanwhile, the Euro zone services PMI advanced to 53.3 from 53.1 reported in the preceding month and the composite went up to 53.1 from 52.9. The following data shows, that services reading improved slightly over the month, and continue to show its amelioration, versus a slight deceleration suggested by the initial numbers. In the meantime, national EU data was mixed. The Italian services PMI returned back into contraction phase at just 49.8 while the overall composite Italian PMI is hardly holding above the major line at 50.8 is worrying. The French readings also were revised down, however, German and Euro zone data, in turn, were revised higher. Overall, high uncertainty and gloomy forecasts remains on the market, while additional disappointing releases could lead to the additional concerns over the ECB's failure to announce new measures.
The United Kingdom May services purchasing managers' index rose more than expected, rebounding from a three-year low in April, which signalled increasing optimism over the health of the British economy. A report of market research group Markit showed that the situation with UK services PMI was more upbeat than expected with 53.5 points growth from 52.3 in April, while economists had forecast a score of 52.5. Activity has risen every month since January 2013 and the latest rate of growth was the slowed seen over the past three years. Services make up for almost 80% of the total gross domestic product, data showed, and this were the good news from the biggest sector in the UK despite the upcoming EU Referendum. Moreover, data remained well above the 50-point mark, indicating an expanding economy. Expectations for activity over the next 12 months strengthened despite the slowest gain in new business in the current 41-month sequence, and were contingent on the outcome of the June 23 EU membership referendum Nevertheless, despite the better-than-expected PMI figure, research group Markit has warned markets of a possible surprise following the June 23 Brexit referendum on the UK's membership in the European Union. Markit also highlighted that it was the slowest gain in new business in the 41-month growth sequence and that hiring was at a 33-month low.
Upcoming fundamentals: European Central Bank's and Federal Reserve speakers
There are few notable fundamental data release today. First is the monthly and yearly German Factory Orders data at 6:00 GMT and second will be US Labor Market Conditions Index at 14:00 GMT. In the meantime, there will be a lot of central bank speakers from the Fed and the ECB. First speaks Fed's Rosengren at 6:15 GMT. Afterwards, the ECB speakers with Constancio at 8:00 GMT, Coeure at 13:45 GMT and Angeloni at 15:35 GMT. Last and most important will be the Federal Reserve's Chairwomans Janet Yellens speech at 16:30 GMT.
EUR/USD surges on US data on Friday
Daily chart: The European currency appreciated in moment's notice against the Greenback, as US Non-Farm Employment Change data was published. Since the employment was expected by various experts to increase by around 160,000, but turned out to be a 38,000 change, the Euro surged from 1.1150 to 1.1367 at the end of day's trading session. In addition it has not rebounded on Monday and is trading around the monthly S2 at 1.1342, which indicates at possible continuation of appreciation of the currency pair.Daily chart
Hourly chart: In the meantime, the hourly chart shows that although the EUR/USD pair surged dramatically on Friday, The Euro has been depreciating since the start of this week's trading and the currency exchange rate has already fallen from the reached high of 1.1373 to 1.1344, which is in line with the previous downward trend started on Thursday and continue on Friday until the US data release. It means that the pair could fall down to the daily PP at 1.1292.
Hourly chart
SWFX sentiment stays bearish
OANDA market sentiment is also bearish with 58% open short positions. Alongside, SAXO Bank clients have increased their bearish positions, as their open short positions are no at 64.81%, which is almost 5% more than Friday.