EUR/USD rebounds against monthly pivot point

Source: Dukascopy Bank SA
  • SWFX market sentiment is 56% bearish
  • Trader set up pending orders are 53% short
  • Pair opened Friday's session at the 1.1126 level
  • Aggregate daily technical indicators bet EUR/USD will surge
  • Economic events to watch over the next 24 hours: US Change in Nonfarm Payrolls (July); US Trade Balance (June); US Unemployment Rate (July); US Change in Manufacturing Payrolls (July); Participation Rate (July)
The common European currency found support in the monthly PP at 1.1107 in the evening of Thursday, and it moved higher afterwards against the US Dollar. Previously the exchange rate erased all of its week's gains, as the currency pair fell to 1.1150. Previously the common European currency surged and set an upwards direction after the FOMC meeting. The FOMC decided not to raise their rate, as latest fundamental data indicates at the US economy stabilizing and not developing at a faster rate that the FED would like it to be.

The number of Americans filing for unemployment benefits increased to 269,000 in the week ended July 30, compared to the preceding week's reading of 266,000, whereas market analysts pencilled in a slight drop to 265,000 in the reported period, fresh figures from the Department of Labour showed on Wednesday. The 269,000 initial jobless claims figure reported last week marked 74 consecutive weeks of claims under the 300,000 level, the longest streak since 1973. The data also showed that the four-week moving average of claims, considered a better measure of labour market trends, grew 3,750 to 260,250 in the reported week. A Labour Department analyst highlighted that there were no special factors influencing last week's claims data. In the meantime, the number of continuous jobless claims fell 6,000 to 2.14 million in the week ended July 23, while the four-week moving average jumped 5,250 to 2.14 million. Last week's claims report has no impact on the NFP data for July, set for release on Friday. Economic desks forecast nonfarm payrolls to show growth of 180,000 for the seventh month of the year, following June's hike of 287,000.

As markets expected, the Bank of England (BoE) introduced a range of additional monetary policy measures and upgraded its growth and inflation forecasts at its August meeting on Thursday amid Britain's decision to leave the European Union. All nine members of the Monetary Policy Committee voted anonymously to cut the main lending rate to a record low 0.25% from 0.50%. Furthermore, the central bank expanded its quantitative easing (QE) programme to 435 billion pound from 375 billion pound, while markets expected the BoE to leave its QE scheme unchanged. Three of nine policymakers voted unanimously against the decision. The latest batch of surveys showed that the UK economy contracted at its steepest pace and may even slip into recession following the Brexit vote, however, the BoE kept its 2016 economic growth forecast unchanged at 2.0%, as the UK economy had a stronger than expected performance in the first half of the year. Nevertheless, the central bank lowered its 2017 growth forecast to 0.8% from an earlier estimate of 2.3%, while the 2018 estimates were slashed to 1.8%. Moreover, the BoE increased its 2018-2019 inflation forecast to 2.4% amid weakness in the Sterling.

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Upcoming fundamentals: US data for July and June

On Friday all of the data affecting the EUR/USD pair is incoming from the US, as the countries statisticians have gathered and are releasing a lot of data about previous months. All of the data will be published at the same time, at 12:30 GMT. The most important of data on the list are US Change in Nonfarm Payrolls for July, the US Trade Balance for June and the US Unemployment Rate for July. Moreover, the pair will be affected by the Change in Manufacturing Payrolls and the Participation Rate.



EUR/USD near 1.11 mark on Friday

Daily chart: The common European currency fell to 1.1126 on Thursday against the Greenback, and the pair almost touched the monthly pivot point at 1.1107. On early Friday morning the currency exchange rate has slightly surged and gained ten pips by 5:00 GMT, and it faces the 55-day SMA at 1.1154, if it continuous to surge during Friday's trading session. The daily aggregate technical indicators forecast a surge for the pair during today's trading session. On the other hand the currency pair might move lower and meet with the monthly PP, which is supported by the 20-day SMA.

Daily chart
© Dukascopy Bank SA

Hourly chart: On the hourly chart of the EUR/USD pair it can be seen that the currency exchange rate was falling at the start of Thursday's trading session until it was at 1.1114 by 11:00 GMT. Afterwards the Euro surged on the US Initial Jobless Claims data, as the rate jumped in the next hour to 1.1144. However, the pair retreated to fluctuate around the level of 1.1130 by 17:00 GMT, and it has been close to this level since then. Although, it seem that the Euro might be starting to surge against the US Dollar, as the pair was trading at 1.1193 by 5:45 GMT.

Hourly chart
© Dukascopy Bank SA


SWFX traders bearish on Friday

SWFX traders continue to be bearish on the pair, as 56% of open positions are short on Friday. However, pending commands have slightly shifted to the bullish side, as they were 53% short at the start of Friday's session.

OANDA trader bearish sentiment has decreased compared to Thursday's 61.90%, as, at the moment, 57.84% of OANDA open positions are short. In the meantime, SAXO Bank clients have decreased their bearish stance, as their open short positions are now at 64.87% compared to 65.37% of last trading session.

Spreads (avg,pip) / Trading volume / Volatility



Average forecast says EUR/USD will trade at 1.10 in November

Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between July 5 and August 5 expect, on average, the currency pair around 1.10 by the end of October. Though 52% (-1%) of participants believe the exchange rate will be generally below 1.10 in ninety days, with 25% alone seeing it below 1.06. Alongside, 43% (+3%) of those surveyed reckon the price will trade in the range between 1.11 and 1.18 on October 30.

© Dukascopy Bank SA

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