- SWFX market sentiment is 59% bullish
- Trader pending orders are 63% to sell
- Pair opened Friday's session at the 1.0930 level
- Aggregate daily technical indicators bet EUR/USD will fall
- Economic events to watch over the next 24 hours: German Bundesbank President Weidmann Speaks
The European Central Bank left interest rates on hold and kept its 1.74 trillion euro ($1.95 trillion) asset buying scheme running in order to boost economic growth and inflation at its October monetary policy meeting on Thursday. As analysts predicted, the benchmark overnight deposit interest rate was left unchanged at - 0.40%; however, the majority of them expect the Bank to announce an extension of asset purchases at the Governing Council meeting in December. Furthermore, the Central bank said it continues to expect the key interest rates to remain at present or even lower levels for an extended period of time, and well past the horizon of the net asset purchases. It also noted that the 80 billion euro asset purchase program is intended to run until March 2017, or beyond, if necessary to raise inflation. Back in September, inflation reached its highest level since 2014, albeit that level was just 0.4%, and according to the latest forecasts released by the ECB it is unlikely to hit its close to 2% target until the end of 2018 or early 2019. The ECB, in response to weak growth, low inflation and high unemployment, was forced to provide additional monetary stimulus, cutting interest rates into the negative territory and launching its QE program.
Manufacturing activity dropped less than expected in the Third Federal Reserve District, a monthly report revealed on Thursday. The Philly Fed's Manufacturing Index came in at 9.7 in October, compared to last month's 12.8, while market analysts anticipated a steeper decrease to 5.2 during the reported period. However, the three-month average rose to 8.2 in October from the previous month's 2.7 points. Furthermore, the six-month outlook advanced to 38.6 from September's 35.2. Other data released by the US Department of Labor showed the number first-time claims for state unemployment benefits increased 13,000 to a seasonally adjusted 260,000 in the week ended October 15, following the preceding week's upwardly revised figure of 247,000 and falling behind the 251,000 market forecast. Filings for US unemployment benefits remained below the 300,000 level for the 85th consecutive week, the longest streak since 1973. The increase in initial claims was partly due to Hurricane Matthew, which caused flooding and damage in the Southeast region. The four-week moving average, considered as a better measure of labor market trends, jumped 2,250 to 251,750 last week. Moreover, continuous claims rose 7,000 to 2.06 million in the week ending October 8.
Upcoming fundamentals: EU Economic Summit Day 2
Today there will be no information coming in from the United States of America, and the Greenback will remain steady. However, it is the second day of the EU Economic Summit, and decisions and outspoken phrases there are set not only to affect the Euro, but the financial markets as a whole. Especially, stocks and alternative safe investments as the bullion could jump on some announcement made by some head of state or central bank at the summit. Although, it is most likely that the speech of the German Bundesbank President Weidmann at 9:00 GMT is the one speech to listen to.
EUR/USD below Brexit low
Daily chart: The common European currency fell below the Brexit low level of 1.0912 against the US Dollar on Friday morning. Previously, the currency exchange rate held on to the support provided by the third monthly support level at 1.0929, where it ended Thursday's trading session. However, as Friday's trading began slightly lower than the previously mentioned level of significance, it began to provide resistance, which pressured the pair to move lower. Since the rate now faces minor support levels, it is most likely that the fall will continue.Daily chart
Hourly chart: The hourly chart for the pair reveals that the rate was almost perfectly flat until Mario Draghi began to speak at 12:30. During the speech the rate bounced almost to 1.1040 level. However, afterwards it retreated and began a fall, which has lasted since then.
Hourly chart
SWFX bullish sentiment increases
SWFX traders continue to increase their bullish sentiment, as 59% of open positions are long on Friday. In the meantime, 63% of pending commands are set up to sell the Euro.
OANDA traders have increased their bullishness on Friday, as 62.93% of open EUR/USD positions are long. In addition, SAXO Bank clients have increased their bullish sentiment, as open long positions now add up to 52.38%, compared to 51.99% during the previous trading session.