- 53% of pending orders are set to buy
- Open positions remain positive in 54% of cases
- Key resistance lies around 1.10
- Short term demand is now focused around 1.08
- Economic events to watch in the next 24 hours: Italian, French, German, Euro zone, US Services PMI (Jul), Euro zone Retail Sales (Jul), US ADP Employment Change (Jul), Trade Balance (Jul) and Crude Oil Inventories (Jul 31)
New orders for US factory goods recovered strongly in June amid robust demand for transportation equipment and other goods, a positive sign for the nation's struggling manufacturing sector. According to the Commerce Department, new orders for manufactured goods surged 1.8% following the 1.1% decline in May. Factory activity was hurt by a strong US Dollar as well as spending cuts in the energy sector after last year's steep drop in crude oil prices. Weak global demand also weighed on business activity in the manufacturing sector, which makes up 12% of the US economy. Even though there are signs that the energy spending drag is waning, the Greenback strength will likely to remain a hurdle. The US Dollar has risen 15% versus major counterparts since June 2014. Orders for transportation equipment soared 9.3% in June, reflecting a 65.4% surge in aircraft bookings.
The Commerce Department also reported orders for non-defense capital goods excluding aircraft, considered as a measure of business confidence and spending plans, rose 0.7%, compared with the 0.9% increase reported last month. Shipments of core capital goods, used to calculate business equipment spending in the GDP data, climbed 0.3% in June. Manufacturing inventories grew a solid 0.6%, which was more than the government estimated in its second-quarter GDP report published last week.
Upcoming fundamentals: All eyes on ADP employment data today
This week will bring two employment gauges for the US in July. Today, in particular, the ADP non-farm employment change is expected to be strongly positive at 216,000 in July. This number is down from 237,000 registered in June, while the announcement is awaited by 12:15 GMT. Additionally on the positive side, US oil inventories have probably decreased further by 1.3 million barrels for the week ended July 31. On the contrary, US trade shortfall is forecasted to widen marginally, down from $41.9 billion in June to $42.8 billion last month.
EUR/USD at two-week low after falling 60 pips
EUR/USD was down around 60 pips on Tuesday, thus registering its steepest drop since July 29. As a result, the pair breached the recent low and plunged below 1.09. Currently the Euro is testing the weekly S1 at 1.0864, but bears are mainly concentrating their attention on the last month's low at 1.0808. This support is, however, strengthened by the monthly S1 from below. The medium-term outlook remains firmly bearish, but short-term gains from Jul low are still quite possible.Daily chart
Meanwhile, in the one-hour chart the EUR/USD cross is showing even clearer down-term. By trading below the 200-hour SMA for a third consecutive day, it becomes less and less likely that the cross will put forward any up-trend scenario in the foreseeable future, as any gains should be capped by the mentioned simple moving average around 1.0990.
Hourly chart
SWFX sentiment stable, long orders are back to 53%
Meanwhile, percentage of bullish positions at OANDA accounts for just 42.44% at the moment, while SAXO Bank market participants are also remaining strongly pessimistic towards the common currency, as their share of longs takes up just 40%.
Spreads (avg,pip) / Trading volume / Volatility
Community members expect Euro to weaken by the end of the week
Participants of the Dukascopy Community Forecasts quiz support the general negative view on the pair, with 60% of all votes being short at the moment.
A proponent of a near-term decline, geula4x, suggests that ""EUR/USD still seems bearish on the daily chart. Price is capped by the long-term down trend line, which has started on June 18, from around 1.1440 price level. This trend line confluences 1.1120 horizontal resistance area, near Friday's high as well as July 27 daily high. This is current resistance, while support lies around 1.0800 area." At the same time, rokasltu assumes that "EUR/USD rate presently is at value which more or less satisfies simultaneously buyers and sellers. Thus, I do not expect big movements during this week, closing around 1.10 level."