- SWFX market sentiment is 54% bearish
- Pending commands in the 100-pip range 65%long
- Pair dropped to the 1.1250 level on Friday
- Aggregate daily technical indicators bet EUR/USD will remain unchanged
- Economic events to watch over the next 24 hours: Bundesbank President's Weidmann's Speech; ECB's Nouy Speech
For the previous month, Germany's trade balance advanced unexpectedly. According to the Federal Statistics office, Germany recorded a headline of 25.6bn euros for April from 21.8bn euros in April 2015. The seasonally-adjusted surplus increased to 24bn euros from a revised 23.7bn euros in May, compared with an expected decline for the month. Moreover, the adjusted surplus was at a record high and will resume supporting the single European currency. The overall German current account surplus expanded to 93.9 billion euros for the first quarter of 2016 from 79.8 billion euros the previous year despite a slight widening in the services deficit. Meanwhile, analysts had expected Germany's trade balance to plunge to 23bn euros last month. Meanwhile, German exports went up by 3.8% in April compared to the same month a year ago, while imports remained nearly unchanged and as a result have led to a wider trade balance for Europe's most powerful economy. Overall, German exporters have strong global position on competitiveness grounds, which will continue to underpin the trade surplus in the short term. Moreover, the surplus will also make it challenging for the ECB to push the Euro substantially weaker even taking into account the quantitative easing programme.
Although there were growing concerns over the strength of the Canadian economy, mostly amid rather weak expectation results of April's data, the latest employment change figures surprised with their positive readings. As a result, these concerns should ease, as stronger employment data should diminish Bank of Canada's willingness to cut interest rates. A total of 13,800 new jobs were added in May, after having unexpectedly fallen to -2,100 in April, as reported by the Statistics Canada. According to expectations, the employment change was likely to rise only up to 1,800 during the previous month, but the upbeat data definitely brings more brightness in the overall Canadian economic activity. Meanwhile, the strong jobs figures also sparked a decline in the unemployment rate, as it dropped to an almost one-year low in May, namely from 7.1% to 6.9%. Consequently, the so-called Loonie grew stronger with the release of the data, having risen up to 1.276 against the US Dollar. Meanwhile, being at 6.9%, the Canadian unemployment rate demonstrates the lowest figure since July 2015. The decline was influenced by a drop in the participation rate which slipped slightly to 65.7 from 65.8, but was mostly drive by strong growth in fulltime employment.
Upcoming fundamentals: Quiet Monday for fundamental data
With the start of a new week there are only two events, which could affect the course of the EUR/USD pair. First is the Bundesbank's President's Weidmann's speech at 7:00 GMT, as the president is set to deliver opening remarks at the banks third cash symposium in Frankfurt. Secondly, ECB's Nouy is set to speak at 13:00 GMT at the European Union Parliament Committee in Brussels.
EUR/USD drops to 1.125 on Friday
Daily chart: The Euro depreciated against the US Dollar on Thursday and Friday falling to the level of 1.125, which is almost halfway down to the level of 1.115, at which the currency exchange rate was before the disappointing US non-farm payrolls numbers came out and sent the pair upwards. On Monday morning the Euro has appreciated a little bit against the Greenback. However, strong resistance is provided by the monthly PP at 1.1282 and the 20-day SMA at 1.1271. In case the pair moves south, it faces the 100-day SMA at 1.1212.Daily chart
Hourly chart: In the meantime, the hourly chart shows that the Euro against the US Dollar stopped bending the lower Bollinger band and moved upwards on Monday morning. At the moment the currency exchange rate is on its way to the monthly PP at 1.1282. However, on its way there the pair faces the 20-hour SMA at 1.1263 and the daily pivot point at 1.1272.In the meantime, aggregate technical indicators predict no changes today for the Euro against the Greenback, but on a weekly timeframe an appreciation of the Euro is forecasted.
Hourly chart
SWFX traders continue bearish sentiment on Monday
OANDA market sentiment is less bearish today compared to Friday, as 56.70% of open positions are short. In addition, SAXO Bank clients have also decreased their bearish stance, as their open short positions are now at 63.41% compared to 64.01% yesterday.