- 58% of all SWFX market positions are short
- Pending commands are minimally bearish (53-54%)
- Weekly pivot point at 1.1250 acts as the first resistance line, while weekly S1 at 1.1152 is the closest support
- Daily technical signals are mixed
- Economic events to watch over the next 24 hours: French, German, Euro zone Flash Services and Manufacturing PMI (May); US Manufacturing PMI (May); FOMC Members Bullard, Williams and Harker Speak
The Euro zone's current account surplus widened in March from February, according to the European Central Bank. The current account balance logged a surplus of 27.3 billion euros in March in adjusted terms, up from a slightly upwardly revised 19.2 billion euros in February. The surplus in goods soared to 31.0 billion euros in March from 24.2 billion euros in February, while the surplus for services remained unchanged at 6.9 billion euros. The surplus on primary income widened to 2.3 billion euros in March from 1.9 billion euros in February. In the 12 months to March, the accumulated current account surplus accounted for 3.1% of Euro zone gross domestic product, compared with 2.7% in the comparative period a year earlier. The Euro bloc's economy expanded compared with the final quarter of last year, albeit both first readings were revised down by one notch, according to the latest report from Eurostat. The seasonally adjusted GDP of the Euro bloc increased 0.5% during the first quarter of 2016, compared with the 0.3% gain posted in the previous quarter, while missing analysts' projections of 0.6% growth. Meanwhile, a separate report showed producer prices in the Euro bloc's number one economy, Germany, declined again on an annual basis in April, while posting positive uptick on a monthly basis. The producer price index decreased 3.1% year-on-year in the reported month.
Japan's exports dropped in April at the quickest pace in three months as a stronger Yen and weakness in China and other emerging markets take their toll on the country's shipments, denting growth prospects for the current quarter. Overseas shipments plunged 10.1% in April from a year earlier, the Ministry of Finance said, while economists had predicted a 10.0% annual decline and following a 6.8% decrease in March. It was the seventh straight month of declines and the biggest since 12.9% in January, when Japanese shipments to Asia slowed sharply ahead of the Lunar New Year holidays. The drop was likely exaggerated by a fall in US-bound car exports due to supply-chain disruptions caused by last month's earthquakes in southern Japan, but a surging Yen and tepid global demand are clouding the outlook for the year. Even after sliding an 18-month high earlier this month, the Japanese currency has gained 9% versus the US Dollar this year, undermining the competitiveness of the nation's products overseas and hurting the earnings of exporters. Worries about the effect of the Yen was on show over the weekend as Finance Minister Taro Aso and his US colleague disagreed over the seriousness of recent moves in the foreign-exchange market.
Upcoming fundamentals: Economists see European economic activity growing in May
Monday morning will have a number of important fundamental indicators released in the Euro zone. PMI numbers for services and manufacturing sectors that take up more than 90% of the region's economy will be out for France and Germany at 7:00 GMT and 7:30 GMT, accordingly. In the meantime, data for the whole currency bloc is due at 8:00 GMT. Analysts foresee improvements across the board, according to flash expectations for May. The only part, which is forecasted to see a continuous decline in activity with the PMI reading below 50 points, is likely to be manufacturing in France.
EUR/USD to start new week on bullish note
For the first time in four days the EUR/USD pair rebounded on Friday of the last week, while the gains are being extended on Monday. We see the most immediate weekly resistance placed at the weekly pivot point near 1.1250, which is backed by a sharp downtrend line around this area. By violating both of them the Euro will neglect the bearish outlook to start focusing on the monthly S1/55-day SMA at 1.1288/96. In the meantime, the closest possible support is located as low as 1.1156/52, about 80 pips below the current spot price.Daily chart
In the 1H chart the pair will encounter a major resistance line at the 1.1250 marker, which is the upper boundary of the channel down pattern. From here EUR/USD will be expected to commence a fresh leg down to 1.1140, with the March 24 low at 1.1143 acting as the only reliable intermediate demand.
Hourly chart
SWFX sentiment worsens to 12-day low
Sentiments of both OANDA and SAXO Bank marketplaces are also bearish towards the researched currency pair. OANDA clients are 53% negative today, while about 63% of SAXO Bank positions maintain the short future outlook too.