- SWFX market sentiment is 57% bullish
- Trader pending orders are 59% to sell
- Pair opened Monday's session at the 1.0989 level
- Aggregate daily technical indicators bet EUR/USD will fall
- Economic events to watch over the next 24 hours: EU CPI Flash Estimate; EU Core CPI Flash Estimate; EU Prelim Flash GDP; US Core PCE Price Index; US Personal Spending; US Chicago PMI
The US economy expanded at its fastest pace since 2014 in the Q3 of 2016 amid higher exports and a rise in inventory investment, official data revealed on Friday. According to the US Department of Commerce, the economy grew 2.9% in the Q3, following the preceding quarter's 1.4% growth and surpassing the 2.5% pick up market forecast. It was the strongest expansion since the Q3 of 2014. However, the stronger than expected figures are unlikely to influence the Federal Reserve's views, as it is more focused on employment and inflation. US exports jumped 10% in the Q3, the largest increase since the Q4 of 2013, contributing 0.83% to GDP growth. The Q3 rise in exports was led by soybeans and analysts suggest that the momentum could be lost in the Q4. Inventory accumulation by businesses increased $12.6 billion in the reported quarter, contributing 0.61% to GDP growth. Investment in nonresidential structures advanced 5.4% in the Q3, the biggest gain since the Q2 of 2014, compared to the prior quarter's 2.1% drop. Meanwhile, business spending on equipment declined 2.7%, falling for the fourth consecutive month. Separately, the Labor Department said the Employment Cost Index remained unchanged at 0.6% in the Q3, in line with analysts' expectations
New orders for US manufactured durable goods dropped unexpectedly last month amid lower orders for computers and electronic products. According to the US Department of Commerce, new orders for capital goods fell 0.1% in September, the most since February, after rising 0.1% in August, whereas analysts had expectations for a 0.1% increase. Meanwhile, orders for core durable goods advanced 0.2% in the same month, following August's 0.2% decline and meeting analysts' forecasts. Other data released by the National Association of Realtors on Thursday showed the Pending Home Sales Index climbed 1.5% to 110.0 in September after falling 2.5% to 108.4 in the preceding month, while economists anticipated an acceleration of 1.2%. Moreover, the Index jumped 2.4% compared with the same month a year ago. In the meantime, the Department of Labor said the number of Americans filing for unemployment benefits dropped to 258,000 in the week ended October 21, compared to the previous week's revised up 261,000 claims. That marked 86 consecutive weeks of claims below the 300,000 level, the longest streak since 1973. Also, the number of continuing claims declined to 2.04 million in the week ending October 15.
Upcoming fundamentals: Various minor data releases
Two times during today's trading session traders have to look at the economic calendar. First it will be at 10:00 GMT when the European data is set to be released. That will include the EU CPI Flash Estimate, EU Core CPI Flash Estimate and the EU Preliminary Flash GDP. At 12:30 GMT data will be incoming and affecting the strength of the Greenback. The US data bundle will consist of the US Core PCE Price Index, US Personal Spending and Income. In addition, at 13:45 GMT the US Chicago PMI is set to be released.
EUR/USD encounters resistance at 1.10
Daily chart: The common European currency depreciated on Monday morning against the US Dollar, as the currency exchange rate encountered resistance put up by the 20-day simple moving average at 1.10. Previously, on Friday, after experiencing a week of almost no volatility, the pair surged, as it jumped from 1.0894 to 1.0982 during the day's trading session. As the rate has encountered resistance, it is most likely to retreat to the weekly pivot point at 1.0942, where it is most likely to find support.Daily chart
Hourly chart: The hourly chart for the EUR/USD pair reveals that the rate was struggling with resistance during Friday's trading session until it passed the monthly S3 at 1.0929 around 16:00 GMT. Afterwards, the pair skyrocketed from 17:00 to 18:00 GMT. Although, since then the rate has been slowly moving southwards.
Hourly chart
Traders remain bullish
Traders remain bullish on the pair, as 57% of open positions remain long. However, trader set up pending commands are short, as 59% of set up orders are to sell.
OANDA traders remain bullish on Monday, as 57.11% of open EUR/USD positions are long. Meanwhile, SAXO Bank clients have become increasingly bearish, as open short positions now add up to 57.60%, compared to 50.60% short positions during the previous trading session.