EUR/USD trading below 1.11 on Monday

Source: Dukascopy Bank SA
  • SWFX market sentiment is 55% bearish
  • Trader set up pending orders are 51% short
  • Pair opened Monday's session at the 1.1077 level
  • Aggregate daily technical indicators bet EUR/USD will surge
  • Economic events to watch over the next 24 hours: US Labor Market Conditions Index (July); German Current Account (June); German Trade Balance (June)
The common European currency fell against the US Dollar on Friday, as the US Non-Farm Payrolls data was released. However, from a technical perspective the currency exchange rate had already began to fall, as it had been moving lower since Wednesday, then it well from the heights of 1.1222. In addition, the currency pair moved below the monthly and weekly pivot points, which are located near the 1.11 mark. Due to that, the EUR/USD pair has little support until the level of 1.1010, where the weekly and monthly S1s are located at.

The US non-farm sector created more jobs than expected last month, whereas the unemployment rate remained unchanged, fresh data from the Department of Labor showed on Friday. According to the Bureau of Labor Statistics, the US non-farm payrolls (NFP) increased by 255,000 in July, while market analysts expected the sector to add just 181,000 jobs in the reported period. Meanwhile, the preceding month's figure was revised up to 292,000 from the originally reported reading of 287,000. Furthermore, the headline jobless rate came in at 4.9% in July, in line with last month's figure, whereas economic desks pencilled in a slight deceleration to 4.8%. The report also revealed that average hourly earnings rose 0.3% month-over-month on a seasonally adjusted basis in July, following the 0.1% increase registered in June, while economists anticipated the indicator to come in at 0.2% in the reported month. On a year-over-year basis, average hourly earnings remained steady at 2.6%, meeting analysts' projections. The NFP report provides important insights into the health of the US economy and offers some clues to the path of future rate hikes. Back in 2012, the Federal Reserve set an unemployment target of 6.5%.

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.

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Upcoming fundamentals: US Labor Market Conditions Index, German Current Account and Trade Balance

As it is accustomed on a Monday, the day is quiet with a few data releases. In the next 24 hours there will are two times, at which traders have to keep their eyes and ears open. First will be 14:00 GMT, when the US Labor Market Conditions Index for July is released. Secondly will be the early Tuesday's morning in Germany at 6:00 GMT, when the German Current Account and Trade Balance are released. The German data will be for the month of June.



EUR/USD fluctuating around 1.11 on Monday morning

Daily chart: The common European currency fell below the monthly PP against the US Dollar on Friday, as the pair even touched the 1.1046 level during Friday's trading session. However, the currency exchange rate opened Monday's trading session at 1.1078, and it surged to 1.11 mark by 5:30 GMT. At that level the currency pair is facing resistance put up by the 20-day SMA, and, in addition, the monthly and weekly PPs are at respectively 1.1107 and 1.1122. Combined together, these resistance levels provide a strong reason for the Euro to depreciate against the US Dollar.

Daily chart
© Dukascopy Bank SA

Hourly chart: On the hourly chart of the EUR/USD pair it can be seen that the exchange rate was slowly surging up to 1.1154 until 12:00 GMT on Friday. However, it fell drastically afterwards, as the currency exchange rate dropped to 1.1046 in the next two hours. Main reason for that was the unexpectedly positive US Non-farm payrolls number, which was published a lot higher, than expected. Afterwards, the common European currency regained some of its strength against the US Dollar, as it had slowly surged to 1.1096 by 6:00 GMT on Monday.

Hourly chart
© Dukascopy Bank SA


SWFX traders bearish on Monday

SWFX traders have slightly moved their sentiment to the bullish side, as 45% of open positions are long on Monday, compared to 44% on Friday. In the meantime, pending commands are 49% long.

OANDA trader bearish sentiment has almost remained unchanged compared to Friday's 57.84%, as, at the moment, 57.96% 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 63.45% compared to 64.87% 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 8 and August 8 expect, on average, the currency pair around 1.10 by the end of October. Though 55% (+3%) of participants believe the exchange rate will be generally below 1.10 in ninety days, with 26% (+1%) alone seeing it below 1.06. Alongside, 40% (-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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