- SWFX market sentiment is 59% bearish
- Trader set up pending orders are 57% short
- Pair opened Tuesday's session at the 1.1147 level
- Aggregate daily technical indicators bet EUR/USD will decline
- Economic events to watch over the next 24 hours: EU GDP (Q2); US PMI Services (August); US ISM Non-Manf. Composite (August)
Fewer jobs were created than expected in the United States last month, official data revealed on Friday. According to the Labor Department, total nonfarm payroll employment in the country jumped 151,000 in August, following July's upwardly revised gain of 275,000, whereas market analysts expected the economy to add 180,000 new jobs in the reported month. Over the past three months, job gains averaged 232,000, compared with 182,000 for the first eight months of 2016. Furthermore, average hourly earnings advanced 0.1%, down from July's 0.3%, while the average workweek dropped to 34.3 hours in the same month from July's 34.4, leading to a 0.2% decline in the index of aggregate weekly hours. Over the past month, job growth in construction and manufacturing was weak, while strong in retail, healthcare, leisure, and government sectors. The headline unemployment rate remained unchanged at 4.9%, whereas economic desks anticipated a slight deceleration to 4.8% during the reported period. Average hourly earnings held steady at 2.4% in the same month. On Wednesday, payroll processor ADP said US companies created 177,000 new jobs in August, slightly surpassing the 174,000 market forecast. The report put into question the possibility of an interest rate increase by the Federal Reserve at its September meeting.
US manufacturing activity fell in the red territory during August despite last month's positive reading. The Institute for Supply Management's Manufacturing PMI came in at 49.4 points in the eight month of the year, following July's 52.6 hike and falling behind the 52.0 market forecast. The manufacturing sector contracted for the first time in five months; however, the overall economy expanded for 87 consecutive months, the report from the ISM showed on Thursday. Other data released by the Labor Department showed that the number of Americans filing for unemployment benefits rose to 263,000 in the week ended August 27, compared to 261,000 claims registered in the previous seven days, while economic desks anticipated a steeper increase to 265,000 during the reported period. The four-week moving average of claims, considered a better measure of labor market trends, dropped 1,000 to 263,000. This marked 78 consecutive weeks of claims below the 300,000 level, the longest streak since 1973. In the meantime, continuing jobless claims increased 14,000 to 2.16 million in the week ending August 20. As the US economy approaches full employment, there is little scope for significant further declines in claims.
Upcoming fundamentals: EU GDP and US indices
The EUR/USD pair will set a direction on Tuesday, when it gets affected by fundamental data from both sides of the Atlantic Ocean. However, on early morning at 6:00 GMT the German Factory Orders have been release, but they did not manage to set a direction for the currency exchange rate. At 9:00 GMT the EU GDP for the second quarter will be released as a month-to-month and annual change. In the second part of the day, markets will be affected by information being published in the US, as at 13:45 GMT the US PMI Services index for August will be out. Afterwards, the US ISM Non-Manufacturing Composite index for August will be published at 14:00 GMT.
EUR/USD near 1.1150 on Tuesday
Daily chart: The common European currency traded almost flat on Tuesday morning against the US Dollar. Previously, the currency exchange rate moved lower on Monday, as it moved out of the channel upward pattern, which it started forming in the aftermath of Brexit. Although, it is likely that the rate will surge during today's trading session, as the 55 and 200-day simple moving averages are providing support just below it at 1.1141 and 1.1131. However, the rate would then be stopped by the resistance cluster located above from 1.1176 to 1.1190.Daily chart
Hourly chart: The hourly chart reveals more information regarding the EUR/USD currency exchange rate. It can be clearly seen, that the pair ignored all the SMAs during its movement, and its direction is being dictated by other supports and resistances. First of all the rate changed direction on Monday morning and fell due to a bounce off of the weekly PP at 1.1176. Afterwards the rate fell to 1.1142, where it was stopped by the lower Bollinger band at 14:00 GMT. Since then the currency pair has been trading more or less flat, as it has reduced its volatility.
Hourly chart
Trader sentiment remains bearish
OANDA trader bearish sentiment has increased compared to Monday's 50.90%, as, at the moment, 51.84% 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 61.82% compared to 63.79% of last trading session.