EUR/USD is range bound slightly below 1.12

Source: Dukascopy Bank SA
  • Bulls lost their majority of open positions to hold 49% of them
  • Pending orders show bullish portion deteriorating from 50% to 38%
  • 55-day SMA prepares to pierce through 200-day SMA to the upside
  • Daily technical indicators project losses for the Euro, weekly ones foresee a rebound
  • Economic events to watch in the next 72 hours: Spanish Unemployment Change (Sep); Euro zone PPI (Aug); US Non-Farm Employment Change (Sep), Unemployment Rate (Sep) and Factory Orders (Aug)

© Dukascopy Bank SA
Market movements remained broadly subdued in course of the yesterday's trading session. Only one currency pair, namely EUR/CHF, registered a change of more than 20 basis points as it surged by 0.56%. The Swiss franc was dragged lower by negative production PMI numbers, which revealed a renewed decline of the sector. Moreover, retail sales in the Alpine country dipped by 0.3% in August against analysts' forecasts of a 0.3% growth. Looking at other currency pairs, EUR/CAD was the only daily loser with a slump of 0.18%, while EUR/AUD was completely unchanged on Thursday.

Manufacturing in the 19-nation Euro zone continued to be in expansion territory in September, but growth slowed from previous months, adding to worries about the ability of the sector to generate more jobs and higher inflation. According to Markit survey, the final PMI measure for the Euro zone posted a 52 points in the reported month, slightly below August's reading of 52.3. The final gauge was in line with market expectations. The recent industry reports from the Euroland shows that despite unprecedented ECB stimulus and substantial currency depreciation, the manufacturing sector is failing to achieve significant growth momentum.

As for manufacturing sectors in the Euro area's biggest economies, all countries but France saw its pace of growth decelerating in September. The latest PMI for Germany fell to 52.3, down from August's reading of 53.3 points, while factory activity gauge in Italy declined to 52.7 points in September from the 53.8 points booked in the preceding month. Meanwhile, the PMI for the Spanish manufacturing sector dropped to 51.7, a 21-month low, slipping from last month's 53.2 points. Unlike these countries, the final manufacturing PMI in France improved in September, as the gauge advanced to 50.6 points, up from last month's figure of 48.3.

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Upcoming fundamentals: US economy to add 201,000 jobs in September



The US Labour Department's official employment data is due today at 12:30 GMT. Markets expect to see more than 200,000 new jobs to have been created last month, up significantly from 173,000 in August. However, the August indicator is highly likely to be revised, as it usually happens every month. Meanwhile, the jobless rate is projected to stay flat at a seven-year low of 5.1%.


EUR/USD is range bound slightly below 1.12

EUR/USD failed to push itself below the 200-day SMA on Thursday, even though bears had attempted to dominate the market. It seems that the price is largely undecided with respect to the future development. Being located near the apex of the triangle pattern, the rate is also capped by strong resistance and support zones from above and below, respectively. Thus, our outlook will remain neutral, as long as EUR/USD is located below 1.1260 or above the 1.1140 mark.

Daily chart
© Dukascopy Bank SA

Situation is unclear in the one-hour chart as the pair has been hovering around the 200-hour SMA during the past 24 hours. We should see the Euro's value climbing above the 50% Fibonacci retracement of the Jul-Aug uptrend at 1.1261, in order to confirm bullish intentions.

Hourly chart
© Dukascopy Bank SA

Share of bulls dropped below 50% for the first time in two weeks

After spending nine consecutive days above 50%, the total share of bullish market participants in the SWFX market slid down to 49% in the past 24 hours of trading. Moreover, distribution between bullish and bearish pending orders in 100-pip range from the current market price is now favouring the latter, because bulls have lost their deposit by 12 percentage points to just 38%.

Meanwhile, bullish open positions at OANDA decreased marginally to 44.50% by Friday morning. SAXO Bank traders are also remaining largely pessimistic with respect to the common currency as their portion of the longs stays at just 34% today.













Spreads (avg,pip) / Trading volume / Volatility




Community members forecast the Euro to grow against the US Dollar this week

© Dukascopy Bank SA

On a weekly basis, the sentiment has improved significantly, as almost 63% of participants in our weekly quiz expect the Euro to rebound versus the Greenback.


Among traders, khalidamassi suggests says that "EUR/USD was supported last week around 1.11 as it recovered slightly towards 1.12, so 1.11 will be the minor support this week, which may send the pair towards 1.14 if US employment is not good. But the new surge in US employment or lower unemployment rate should give a boost for USD, especially after Yellen's last speech about raising rates before year-end."

Average forecast says EUR/USD will trade at 1.13 by December

Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between Sep 2 and Oct 2 expect, on average, to see the currency pair around 1.13 by the end of December. Though the majority of participants, namely 52% of them, believe the exchange rate will be generally below the 1.14 mark in ninety days, with 40% alone seeing it below 1.10. Alongside, 28% of those surveyed reckon the price will trade in the range between 1.14 and 1.20 by the end of December of this year.

© Dukascopy Bank SA

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