- 53% of SWFX traders are going long on the Euro in terms of current open trades
- Pending orders are the most bearish in about five calendar weeks (57-58%)
- The pair is set to meet a dense cluster of resistances between 1.0970 and 1.1045; success to breach it depends on upcoming NFP data
- Five out of eight weekly technical indicators are neutral on EUR/USD, daily outlook is bearish
- Economic events to watch over the next 24 hours: Italian GDP (Q4); US Non-Farm Payrolls, Average Hourly Earnings and Unemployment Rate (Feb); US Trade Balance (Jan)
The Euro zone's services sector lost momentum for the second month in a row in February, led by a particularly weak performance in France. The Euro bloc's services PMI dropped to 53.3 in February, the lowest level since January 2014. The composite PMI, which includes both manufacturing and services sectors, decline to a 12-month low of 53.0. France's services sector was the worst performer, with the corresponding gauge falling to 49.2, down from 49.8, hitting the lowest reading since November 2014. Markit reported that French hotel and restaurant sector was particularly weak in the wake of the Nov.13 Paris attack. Meanwhile, Germany's services sector improved slightly, with the services PMI climbing to 55.3 last month, up from 55.0 in January. Germany's economy, the Euro zone's powerhouse, remained on a steady yet modest growth path last year as it expanded by 0.3% of GDP in the final quarter of 2015. On an annualized basis, the Euro zone's number one economy grew 1.3% in the reported period, compared with the 1.7% rate seen in the July-September period. A separate report showed Euro zone's retail sales weakened in January, climbing 0.4% on a monthly basis. On an annual basis, retail sales in the 19-nation bloc saw a 2.0% increase during the reported month, after an upwardly revised the 2.1% growth in the previous month
Australia's retail sales rose in January, but disappointed economists' expectations as consumers pared back on food shopping. Retail sales increased a seasonally adjusted 0.3% on month in January, according to the Australian Bureau of Statistics, compared with December's result that was flat, but slightly below economists' forecast of a 0.4% rise. The retail spending data came days after GDP report showed the Australian economy grew at the fastest pace in almost two years in the final quarter of 2015, a sign the worst of the global commodity rout may be over. Australia's gross domestic economy rose 0.6% in the fourth quarter from the July-September period, when the economy grew an upwardly revised 1.1%, outpacing economists' forecast for a 0.4% growth. That propelled growth for the whole year to 3%, compared with 2.5% that had been expected by analysts. Consumers were the main driver of growth, with household consumption expenditure increasing 2.9% annually. Households spent more last year even though their wages rose just 2.2%, the slowest annual rate on record. The improvement of labour demand over the last year despite weak economic growth levels has been an important measure of the economy's strength through mining downturn, and something that surprised policy makers.
Upcoming fundamentals: Italy's GDP growth and US NFP
The only data release from the Euro area will be Italian GDP at 9:00 GMT, while most of the attention will be paid to the upcoming employment report from the US. Nevertheless, Europe's fourth and the Euro zone's third largest economy is expected to confirm its expansion in the fourth quarter 2015 at 0.1%. On the annual basis analysts see an advance of 1%. As for US employment, the country is forecasted to have added 195,000 new jobs in February, up from 151,000 over the first month of 2016.
EUR/USD spikes back to reach 55-day SMA
In the run up to Friday's US payrolls data, the EUR/USD cross skyrocketed the most since February 9 and retested the January-February uptrend line. The bulls were limited by the 55-day SMA, currently at 1.0970. This moving average is succeeded by another bunch of resistances including the 20-day SMA, weekly and monthly pivot points. Ultimately, there is the 200-day SMA placed at 1.1045. An advance above all of them should neutralise our outlook for next week, also noting that weekly technical indicators are expecting a sideways movement starting March 7.Daily chart
As estimated yesterday, EUR/USD surged considerably on Thursday and touched the 200-hour SMA at 1.0948. There is a 45-pip spread between this moving average line and the January uptrend. Success here would imply another up-leg to the Feb 15-19 downtrend at 1.1016, from which there should be more pressure on the bearish side.
Hourly chart
Bulls stay above 50%, orders worsen in both ranges
Meanwhile, SAXO Bank short clients have been successful in gaining the 60% mark over the past 24 hours, up from 57% yesterday morning. Alongside, bullish-bearish difference in the OANDA market is being maintained at only two percent for the time being.
Spreads (avg,pip) / Trading volume / Volatility
Dukascopy Community members are strongly bearish with respect to EUR
Participants of the Dukascopy Community Forecasts quiz support the general negative view on the pair, with 64.3% of all votes being short at the moment. The average expectation for the end of the current week is located at 1.081. According to the opinion of Besim76, "EUR/USD lost 1.82% this week, as the markets reversed midweek. The Euro fell on weak inflation data and stress over the possibility of an exit of the UK from the EU; therefore, I am expecting a bearish trend".
Concerning other forecasts among members of the Community, Trademaster assumes "EUR/USD strongly remains in a bearish market and may continue to depreciate further this week due to increasing probability that the European Central Bank will soon act to implement additional monetary easing measures." From the other side of the coin, megajorko thinks that "after Friday's drop the pair could start rising again. A huge increase is not expected, while the magnet of 1.10 will remain."