EUR/USD upbeat after US payrolls

Source: Dukascopy Bank SA
  • 60% of pending orders are set to sell
  • Open positions dropped below 50% for the first time in six days
  • Key resistance lies around 1.10
  • Short traders are now focusing on recent low at 1.0848
  • Economic events to watch in the next 24 hours: Greek Industrial Production (Jun), FOMC Members Fisher and Lockhart Speak

© Dukascopy Bank SA
Optimistic fundamentals from Canada failed to provide the Loonie with positive momentum in its pair with the Euro. As a result, EUR/CAD cross rallied 0.59% and was outperformed only by the EUR/CHF currency pair, which added 0.6%. Meanwhile, the Sterling continued to under-perform its major peers for a second day in a row after dovish BoE vote split on interest rates. From another side of the coin, the Aussie appreciated by 0.39% versus the common currency, as the RBA said it was satisfied with the current exchange rate of the Australian currency.

German industrial output unexpectedly declined in June, underscoring the risks for the Euro zone's largest economy from a weaker growth in emerging-market countries including China. The Economy Ministry said German production dropped 1.4% compared with the previous month, whereas economists had predicted a 0.3% increase. In a separate report, the Federal Statistics Office said that exports declined 1%, while imports slid 0.5%. Germany's trade surplus declined to 22 billion euros, compared with 22.8 billion euros in May. Some German manufacturers, although benefiting from cheaper oil prices, low interest rates and a recovering Euro area's economy, have struggled in recent months as a result of Greece's crisis and a slowdown in China.

Meanwhile, industrial output in France was weaker in June both on a monthly and annual basis. French industrial output slid 0.1% on month in June, following a 0.4% gain in May. In annual terms, the reading rose 0.6% in the reported month, compared with the revised 2.5% gain in May and analysts' expectations for a 1.4% increase. At the same time, the nation's manufacturing production dropped 0.7% after rising 0.7% a month earlier.

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Upcoming fundamentals: Two FOMC members to speak on Monday



The Federal Reserve Governor Richard Fisher and Atlanta Fed President Dennis Lockhart are going to speak on Monday. Even though their speeches may not give any insight into the next Fed interest rate decision, these two FOMC members are eligible to vote this year. Therefore, any remarks are likely to lead to increased volatility today. Meanwhile, Greek manufacturing industry is due to register a sharp drop in June, as data will be published at 9:00 GMT on Monday. Last month's industrial production slumped as much as 4% in Greece, calculated on a yearly basis.


EUR/USD pared losses despite strong payrolls

At first, markets pushed the most traded FX cross considerably downwards on Friday, with volatility provided by US labour market fundamentals. However, just before touching the Aug 5 low at 1.0848 the Euro bounced back and managed to regain around 100 pips by the end of Friday, closing the session below 20-day SMA at 1.0965. With technical indicators remaining mixed in short and mid-term, bulls are still aiming at recent highs/monthly PP around 1.10, while bears have the 1.0848 mark in their sights.

Daily chart
© Dukascopy Bank SA

At the same time, in the one-hour chart the EUR/USD currency pair violated the 200-hour SMA, currently at 1.0950. This move is due to change the near term outlook from negative to neutral, in case the pair succeeds in consolidating above this line in the next 48 hours. Any idea for having a positive expectation towards the Euro is darkened by the long-term downtrend, which is quickly approaching the current exchange rate.

Hourly chart
© Dukascopy Bank SA

SWFX bulls lose advantage, orders remain in red

Sentiment towards EUR/USD among SWFX market participants fell below the neutral level over the weekend, by plunging from 50% to 47% by Monday morning. Alongside, the portion of bullish pending orders in 100-pip range from the current market price dropped back to the level of 40% observed on Thursday of the previous week.

Meanwhile, percentage of bullish positions at OANDA accounts for just 37.48% 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 34%.













Spreads (avg,pip) / Trading volume / Volatility



Average forecast says EUR/USD will trade below 1.10 by November

Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between Jul 10 and Aug 10 expect, on average, to see the currency pair just below 1.10 by the end of November. Though the majority of participants, namely 60% of them, believe the exchange rate will drop below this mark in ninety days, with 33% alone seeing it below 1.06. Alongside, 21% of those surveyed reckon the price will trade in the range between 1.10 and 1.16 by the end of November of this year.

© Dukascopy Bank SA

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