- SWFX market sentiment is 53% bearish
- Pending commands in the 100-pip range 67% short
- Pair opened Tuesday's session at the 1.1056 level
- Aggregate daily technical indicators bet EUR/USD will depreciate
- Economic events to watch over the next 24 hours: German CPI (June); US JOLTS Job Openings (May); Wholesale Inventories (May); Fed's Kashkari Speaks
The U.S. labour market continued to slow in June but at a more moderate pace as the economy moved closer to full employment, according to an index prepared by the Federal Reserve. The US labour market conditions index registered a 1.9 decline for June from after a revised drop of 3.6 the previous month. This was the sixth successive decline and also a slightly larger than expected decline for the month, maintaining the generally disappointing trend seen for 2016 as a whole. The data could suggest an imminent turning point, but further evidence will be needed to convince markets of a sustained improvement despite the bumper payrolls release last Friday. The LMCI is a broad composite index of 19 labour-market indicators and it watched closely by the Federal Reserve with Chair Janet Yellen instrumental in setting up the index. The Fed introduced the index in 2014 as a way to measure the labour market's momentum. Moreover, Fed officials have touted the LMCI as a more comprehensive view of the labour market than the one provided by individual data releases from the Department of Labour and other agencies.
The UK's total trade deficit in goods and services widened in May to £2.3bn in May; however, was not as bad as the £3.6bn forecasts made by economists. The following tendency could be explained by deteriorating export versus the import, as the pound has depreciated. Meanwhile, exports dropped 4.4% on a monthly basis while imports slipped down 3.5%. Focusing on visible trade in goods, the Office for National Statistics calculated that the UK's trade deficit for May contracts and equaling to £9.88bn from the £10.53bn in April, better than the £10.70bn forecast. Moreover, for the threemonth period March to May, exports advanced 3.2% compared to the three months to February, which was markedly above the 1.1% increase in imports in the same period. In the meantime, sterling has continued to stabilise, but failed to make any notable gains after less than expected decline of 0.5% in industrial production, since many expected the fall to be in the region of 1%. Concerning politics, the race towards the next prime minister is now narrowed to the final two, namely current home secretary—Theresa May and energy secretary, Andrea Leadsome, who was a major campaigner to leave the EU. The decision will be made by the Conservative Party's 150,000 members.
Upcoming fundamentals: German CPI, US JOLTS job openings and wholesale inventories
On Tuesday morning, at 6:00 GMT the German already released the CPI data for June hitting all forecasts exactly point to point. Later in the day, the US JOLTS Job Openings for May are set to be released at 14:00 GMT. In addition to that, at the same time US Wholesale Inventories data will be published. Last but not least, late evening at 21:30 Minneapolis Fed's Kashkari will speak in Marquette, Michigan.
EUR/USD gains on Monday
Daily chart: The Euro appreciated against the US Dollar on Monday, as it surged from 1.1045 at the start of Monday's trading session to 1.1056 at the end of the day. At the moment, the currency exchange rate has surged on Tuesday morning, as it is at 1.1077, which is just below the resistance put up by the weekly pivot point at 1.1079 and the 200-day SMA at 1.1091. However, the past seven session trend line is also located at around the level of the weekly PP. In addition, there are no supports below, which could stop the rate after it bounces off the resistance cluster.Daily chart
Hourly chart: The hourly chart shows that the Euro moved upwards steadily against the Greenback since midday of Monday. The currency exchange rate only bounced off the upper Bollinger band at 14:00 GMT during yesterday. On Tuesday morning, the pair surged by 17 pips at 1:00 GMT, and afterwards it traded above the weekly PP at 1.1079 for two hours from 2:00 GMT to 3:00 GMT. It did not move further north, as the exchange rate bounced off the 200-hour SMA at 1.1091, which is just above the weekly pivot point.
Hourly chart
SWFX traders bearish on Tuesday
OANDA trader bearish sentiment has remained almost unchanged compared to Monday's 59.36%, as, at the moment, 59.39% of OANDA open positions are short. In the meantime, SAXO Bank clients have increased their bearish stance, as their open short positions are now at 56.04% compared to 53.45% of last trading session.