- SWFX market sentiment is 52% bearish
- Pending commands in the 100-pip range 73% short
- Pair opened Monday's session at the 1.1044 level
- Aggregate daily technical indicators bet EUR/USD will depreciate
- Economic events to watch over the next 24 hours: Eurogroup Meetings; Fed's George Speaks; US Labor Market Conditions Index (June); Fed's Lockhart Speaks
On Friday, the US jobs market was surprised by positive economic data which expanded during the previous month, allaying fears that the economy was exposed for a sustained slowdown after a moderate start of this year. According to the data, the unemployment rate went up to 4.9% from 4.7% May. This could be explained mostly due to the 414,000 people who entered the US labour force, which spurred the labour force participation rate up to 62.7% in June compared to the 62.6% in May. Moreover, according to the data released by the Bureau of Labour Statistics, employers injected 287,000 jobs in June, up sharply from a soft addition of only 11,000 jobs the month before. Although, many analysts forecasted job growth to rebound, they were also highly waiting to see if the gloomy figures from May were repeated, which would be a hint that the economy might be sinking into deeper trouble. In the meantime, May jobs report is only one report, as well as June's jobs report is just one report. Therefore, it is not enough in order to get a better sense of how these reports will affect the Fed's outlook for monetary policy.
The UK's total trade deficit in goods and services widened in May to £2.3bn in May; however, was not as bad as the £3.6bn forecasts made by economists. The following tendency could be explained by deteriorating export versus the import, as the pound has depreciated. Meanwhile, exports dropped 4.4% on a monthly basis while imports slipped down 3.5%. Focusing on visible trade in goods, the Office for National Statistics calculated that the UK's trade deficit for May contracts and equaling to £9.88bn from the £10.53bn in April, better than the £10.70bn forecast. Moreover, for the threemonth period March to May, exports advanced 3.2% compared to the three months to February, which was markedly above the 1.1% increase in imports in the same period. In the meantime, sterling has continued to stabilise, but failed to make any notable gains after less than expected decline of 0.5% in industrial production, since many expected the fall to be in the region of 1%. Concerning politics, the race towards the next prime minister is now narrowed to the final two, namely current home secretary—Theresa May and energy secretary, Andrea Leadsome, who was a major campaigner to leave the EU. The decision will be made by the Conservative Party's 150,000 members.
Upcoming fundamentals: Eurogroup Meetings, Fed speakers and US labour market conditions
This week starts with the meeting of the Eurogroup, which consists of the Eurogroup Presiden, Finance Ministers from euro area member states, the EU Commisioner for economic and monetary affairs and the President of the European Central Bank. The meeting is set to start at 9:00 GMT, and the parties present will discuss a wide range of financial issues. Later in the day, at 14:00 GMT Kansas City Fed's George will give a speech at the Mid-America Labor Management Conference in Missouri and US Labor Market Conditions Index for June will be published at that time. Afterwards at 15:15 GMT Atlanta Fed's Lockhart is set to give a speech at Eighth Annual Rocky Mountain Economic Summit in Victor, Idaho.
EUR/USD falls to 1.1050 on Friday
Daily chart: The Euro started Friday's trading session against the US Dollar at 1.1060, and the currency exchange rate was volatile between the levels of 1.1120 to 1.1002 during the session, until it ended day's trading at 1.1050. At the moment, the European currency against the Greenback is almost unchanged, as it was trading at 1.1051 by 4:45 GMT. Daily aggregate technical indicators forecast a continuation of the Euro's depreciation against the Buck today.Daily chart
Hourly chart: The hourly chart shows that the Euro fell sharply against the US Dollar in the hour starting at 12:00 GMT on Friday, and the currency exchange rate surged in the following hour by reaching even the mark of 1.1120 at one moment during the hour. However, the pair fell to the level of around 1.1040 later on, and it has been fluctuating around this level since then.
Hourly chart
SWFX traders bearish on Monday
OANDA trader bearish sentiment has decreased compared to Friday's 60.49%, as, at the moment, 59.36% of OANDA open positions are short. In addition, SAXO Bank clients have decreased their bearish stance, as their open short positions are now at 53.45% compared to 56.38% of last trading session.