- Some of open positions changed hands; bears gained minimal majority (51% vs 49%)
- Commands to buy the Euro also continued to slump, down from 44% to 39%
- Bears continue to focus on the 1.08 zone; initial supply is created by 7-month uptrend at 1.1067
- Daily technical indicators assume the Euro will lose value against the Greenback
- Economic events to watch in the next 24 hours: Spanish Unemployment Change (Oct); ECB President Draghi Speaks; US Factory Orders (Sep)
The Euro area's factory activity posted a modest growth at the start of the fourth quarter, slightly outpacing September's levels, as the bloc's manufacturing sector held firm above contraction territory. According to the final figures provided by the Markit Economics, the manufacturing PMI across the Euro zone rose to 52.3 in October, from 52.0 in the preceding month. Meanwhile, the markets had expected the reading to remain unchanged. The report revealed that the manufacturing activity accelerated in Italy, Austria and the Netherlands and grew in all nations covered except Greece. However, the overall situation appeared to be relatively downbeat for the manufacturing sector across the Euroland, as the ECB's massive stimulus programme had little effect on sector's recovery, while the factory gate prices continued to contract, spurring more concerns about the efficiency of the ECB policies.
Concerning four largest economies in the Euro zone, manufacturing sectors there posted quite mixed readings for October. In Germany, the manufacturing PMI slipped to 52.1 from 52.3 in September, compared with an initial reading of 51.6. October's final PMI for manufacturing sector in France remained unchanged at 50.6, slightly worse than the flash reading of 50.7. At the same time, the Italian manufacturing PMI advanced to 54.1 points in the given month, up from 52.7 in September. At last, manufacturing in Span edged down to 51.3 in October, slipping from last month's 51.7 points.
Upcoming fundamentals: Spanish unemployment to increase significantly in October
Analysts estimate the number of registered unemployed people in Spain to rise by 70,300 in October. It will imply the highest pace of job losses since January on the back of this year's cooling tourist season. Numbers are due today at 8:00 GMT. Meanwhile, ECB President Mario Draghi will deliver opening remarks to the event of European Cultural Days in Frankfurt. The speech is expected to take place at 19:00 GMT. Among US fundamentals, which may change the direction of EUR/USD currency pair, the factory orders data will come in at 15:00 GMT on Tuesday. Economists foresee a second consecutive month of negative growth in September by 0.8%, following a drop of 1.7% in the preceding month.
EUR/USD uncertain ahead of ADP employment
EUR/USD showed no signs of volatile development on Monday, being that market participants are waiting for major fundamental impetus to come through in course of the second part of this week. The Euro is underpinned by the weekly pivot point at 1.0998, while one of the most important resistances is represented by the 7-month uptrend line at 1.1067. The bearish scenario seems more likely for the moment. Supported by daily technical studies, bears are targeting the 1.09 mark (Oct 28-29 lows) and a success here will expose the next demand area at 1.08.Daily chart
From the point of view of the one-hour chart, we expect EUR/USD to resume falling in value in the nearest future. The 200-hour SMA at 1.1010 is quickly approaching the spot price of 1.1018. Additional supply was built by the Oct 23-30 downtrend, which coincides with the 200-hour moving average at the moment.
Hourly chart
Market sentiment deteriorates as bulls lose majority
At the same time, the majority (58%) of SAXO Bank clients still expect EUR/USD to lose value, no change during from Thursday of the last week. However, OANDA long traders manage to hold 51.75% of all open positions and preserve their majority over bears at the moment.