- 53% of SWFX open positions belong to bulls
- Commands to buy the Euro dipped back below 50%, down from 52% to 44%
- Bears continue to focus on the 1.08 zone; initial supply is created by 7-month uptrend at 1.1060
- Daily technical indicators are sending a bearish aggregate signal on Monday
- Economic events to watch in the next 24 hours: German IFO Business Climate (Sep); Bundesbank Monthly Report; US New Home Sales (Sep) and Dallas Fed Manufacturing Business Index (Oct)
The Euro zone jobless rate declined in September to the lowest level since January 2012. According to Eurostat, the unemployment rate dropped to 10.8% last month, compared with a revised 10.9% in August and better than economists' expectations of 11.0%. Despite the fall to multi-year low, jobless in the currency bloc is a problem, as it still remains well above the 7.5% level seen prior to the global financial crisis. In Germany, the Euro bloc's number one economy, the unemployment rate was unchanged at 6.4% in October, while the participation rate rose.
At the same time, consumer prices in the 19-country bloc posted a zero growth in the twelve months through October, following the 0.1% decline in the previous month, when the gauge slid below zero for the first time since March. Core inflation, which excludes volatile items such as food, tobacco, alcohol and energy, climbed 1.0% on an annual basis in October, compared with the 0.9% growth recorded in the preceding month. As inflation in the Euro zone has stubbornly stuck below the ECB's target level of 2%, the central bank may expand or alter stimulus programme to support the region's economy and underpin consumer prices. On top of that, the ECB may also cut deposit rate.
Upcoming fundamentals: Euro area's manufacturing sector to expand in October
The Purchasing Managers' Indexes from a number of major European economies are due in the morning on Monday. One thing is common for Italy, Spain, France and Germany: all of them are estimated to show the PMI's on an expansion territory, namely above 50 points. The slowest rise in activity of 50.7 points is forecasted for France, Europe's second biggest economy.
EUR/USD fails to cross 7-month trend-line
The March-October uptrend stays strong for the time being, while being able to keep EUR/USD under bearish pressure. As long as trading continues below 1.1060, where the trend-line currently finds its location, we are going to hold a bearish stance with respect to the pair. Any rally is going to face substantial resistances in the 1.1100/60 area, which can easily resume a sell-off in the medium term. Key support is placed around 1.08 for the moment, where weekly S2 and lower Bollinger band merge with May and July lows.Daily chart
In the one-hour chart EUR/USD is now failing to reverse a recovery around the upper edge of the channel down pattern. Despite that, both 200-hour SMA and September low are going to put additional downward pressure on the Euro and will underpin our sceptical view from the perspective of the daily chart.
Hourly chart
SWFX bullish share grows to 53%
The majority (58%) of SAXO Bank clients still expect EUR/USD to lose value, no change during the past three calendar days. However, OANDA traders manage to hold 50.73% of long open positions, which also means little change since the time of our last report back on Friday.