- 55% of all SWFX market positions are short
- Pending commands are undecided and mixed on Friday
- Risks are skewed to the downside, as the pair closed below 55-day SMA
- New daily and weekly technical indicators are bullish
- Economic events to watch over the next 24 hours: US Existing Home Sales (Apr); FOMC Member Tarullo Speaks; G7 Meetings in Japan
The number of people seeking US jobless aid plunged from a 14-month high during the last week, partially erasing increases of the last two weeks that had fuelled concerns about rising layoffs. According to the Labour Department, initial applications for state unemployment benefits dropped 16,000 to a seasonally adjusted 278,000 for the week ended May 14. That followed a previous jump to 294,000, which was the highest recorded level since February 2015. Such a decrease was initiated due to fewer filings in New York following the preceding weeks' jump that reflected difficulties adjusting for the spring break holiday. Meanwhile, the four-week moving average, a less volatile measure, rose to 275,500. Claims have now been below 300,000, showing the longest stretch since 1973 meaning a strong job market. A small rate of dismissals, in line with stable hiring, shows companies have confidence in the demand outlook. The impressive bunch of firmer economic reports was released amid signs that the Federal Reserve probably could raise interest rates again. The minutes from the US central bank's for the April 26-27 policy meeting, published on Wednesday, revealed that most officials are considering raising rates in June in case data continued to point to an improvement in second-quarter growth.
Retail sales in the UK jumped much higher than expected in April, along with shoppers that put jitters over the outcome of Britain's referendum on membership to the European Union aside to go on a spending spree. Retail sales climbed by 4.3% in April on the year-on-year basis, according to the latest data from the Office for National Statistics. The data was way above the revised 3.0% recorded in the previous month and the 2.5% that was expected by economists. The figures suggest that the UK economy is poised for mild economic growth in the second quarter, after a sluggish start to the year. The data came a day after the ONS released figures showing an uptick in Britain's employment level and a slightly higher average wage. The number of people in work rose by 44,000 to 31.6 million in the three months to March compared to the previous three-month period, while the jobless rate stayed at 5.1%. Among the factors that have recently weighed on British growth is uncertainty surrounding the UK's future in the EU, with the nation's referendum on the matter due June 23. Bank of England officials say that a vote to exit the union would slow the UK economy and see customers and businesses hold off on spending decisions. Those in favour of leaving the EU, however, say that Britain would ultimately benefit from the chance to negotiate its own trading agreements and regulations.
Upcoming fundamentals: US home sales to continue increasing in April
While the trading session in Europe will be quiet on Friday, we are expecting some fundamentals be come out from the other side of the Atlantic. US existing home sales for April are due at 14:00 GMT, as they are estimated to grow by 1.3% on a monthly basis after a 5.1% surge in the previous month. This is set to push the total annualized number of home sales up to 5.40 million from 5.33 million, the highest number in three months. In the meantime, Federal Reserve Governor Daniel Tarullo will talk about supervision of insurance companies at 13:00 GMT. This particular business has been hardly hit by negative and very low interest rate central bank policies.
EUR/USD extends losing streak
Even by sliding only 12 pips on Thursday, the EUR/USD currency pair has set a tone for deeper losses in the foreseeable future and prolonged its drop for a third straight day. Yesterday's loss was capped at the weekly S2 at 1.1182, but EUR/USD may retest this support over the last trading day of this week. If successful, the Euro will be a position to put the 100-day SMA (1.1152) at major bearish risk. However, a sell-off is not anticipated by the technical indicators on both daily and weekly time frames. In case the bulls revive, for that purpose the nearest supply level is located at 1.1246 (weekly S1).Daily chart
The cross is hovering below the April low of 1.1214 at the moment. Moreover, this situation is consistent with trading under the channel down pattern's lower boundary and the 200-hour SMA. Therefore, future expectations are quite depressed for the common European currency, which may become a subject to further weakness in the direction of the March low at 1.1143, the most immediate historical support.
Hourly chart
Future traders' expectations are more positive today
Sentiments of both OANDA and SAXO Bank marketplaces are also bearish towards the researched currency pair. OANDA clients are 54.43% negative today, while about 62.31% of SAXO Bank positions are also maintaining the short future outlook.
Spreads (avg,pip) / Trading volume / Volatility
Dukascopy Community members are bearish on this week's perspectives of EUR/USD
Three fourths of the Dukascopy Community members are expecting a decline in the value of the Euro against the Greenback by the end of this working week. The median estimate for May 20 stands at the level of 1.13. Among traders, megajorko suggests that the pair will indeed tumble over the next few days. He says that "I see a slightly bearish outlook and the only thing that could weigh is FOMC decision. We saw a better than expected retail sales number and this will give some boost to USD [...]."
On the other hand, trader Eco assumes that the incoming European fundamental statistics will be supportive for the European currency, not the US Dollar. He thinks that "This week will bring a lot of economic announcements that may support the Euro."