- SWFX market sentiment is 53% bearish
- Trader pending orders are 60% to sell
- Pair opened Tuesday's session at the 1.1039 level
- Aggregate daily technical indicators bet EUR/USD will surge
- Economic events to watch over the next 24 hours: Elections of the President of the United States of America
German factory orders dropped unexpectedly in September amid weak domestic demand and sluggish overseas demand, official data showed on Monday. According to Destatis, orders for German-made products fell 0.6% in the reported month, the biggest drop since April, after rising for two consecutive months, while market analysts expected a 0.2% increase. Meanwhile, the August gain of 1.0% was revised down to 0.9%. Despite the September drop, however, the overall growth of factory orders remained positive in the Q3. Destatis also pointed to improved sentiment indicators that provided hopes for a rebound in the industrial sector over the rest of the year. Nevertheless, analysts remained cautious, noting that the sector remained weak since 2013-2014. Domestic demand declined 1.1%, whereas foreign orders fell 0.3% in September. Factory orders from other countries in the Euro zone decreased 4.5% in the same month. The drop was mainly driven by lower demand for capital goods produced in the Euro zone's largest economy. Orders intermediate and consumer goods increased modestly. The German economy was expected to lose steam in the Q3 2016, after expanding 0.7% and 0.4% in the Q1 and Q2, respectively.
US private companies added fewer than expected jobs last month, whereas the unemployment rate improved slightly, the October Non-Farm Payrolls report showed on Friday. According to the Bureau of Labor Statistics, the US economy created 161,000 new jobs in the reported period, while market analysts expected nonfarm payrolls to increase by 174,000. Meanwhile, the September gain was revised up to 191,000 from the originally reported 156,000. However, the odds of a December rate remained quite high, despite today's disappointing jobs report. Furthermore, average hourly earnings advanced 2.8% and 0.4% on annual and monthly basis, respectively, while average weekly remained unchanged at 34.4 last month. The unemployment rate declined unexpectedly to 4.9% in October, following the preceding month's 5.0%. After the release, the US Dollar declined slightly against other major currencies, trading at 1.1111 against the Euro and 103.10 against the Japanese Yen. Separately, the Bureau of Economic Analysis said on Friday that the US trade deficit narrowed to $36.44 billion in the same month from September's gap of $40.46 billion, which was revised up from the originally reported $40.70 billion deficit. Economists expected the US trade gap to decrease to $37.80 billion during October.
Upcoming fundamentals: Ignore everything but the election
The title says it all. Look at the elections, look at the results coming in from the states. Traders have to remember that a Clinton victory is likely to bring a surge in stocks and their indices and the US Dollar. A Trump victory will bash the Mexican Peso, and the Swiss Franc together with gold will surge. On the other hand, risk averse market participants are most likely to close their positions.
EUR/USD remains near 1.1050
Daily chart: The common European currency slightly fluctuated but did not move anywhere against the US Dollar on Tuesday morning, as the currency exchange rate stayed just below the 1.1050 level. Previously, on Monday the currency pair depreciated, as US politics strengthened the Greenback. Today is the US presidential election, which means that technical analysis might not predict the results, as the rate is in the middle of a larger scale descending channel pattern. Traders will rather look at fundamental analysis of the US politics or stick to their old long term trades.Daily chart
Hourly chart: The hourly chart reveals, that the EUR/USD currency exchange rate is bouncing between the weekly and monthly pivot points, respectively at 1.1072 and 1.1025. In addition, most recently the Bollinger bands have contracted and are squeezing in the rate in a 30 pip range. Not an unusual situation before large volatility events in the financial markets.
Hourly chart
Traders remain bearish
SWFX traders are bearish on the pair, as 53% of open positions were short on Tuesday morning. Meanwhile, 60% of trader set up orders are to sell the Euro.
OANDA traders remain with a bearish outlook, as 55.93% of open EUR/USD positions are short on Tuesday. Meanwhile, SAXO Bank clients have decreased their bearishness, as open short positions now add up to 64.04%, compared to 65.87% short positions during the previous trading session.