- SWFX market sentiment is 53% bullish
- Trader pending orders are 62% to sell
- Pair opened Monday's session at 1.0625
- High uncertainty guides EUR/USD fluctuations
- Economic events to watch over the next 24 hours: Eurogroup meetings, US ISM Non-Manufacturing PMI, FOMC members Bullard and Dudley speak
The US unemployment rate fell to a nine-year low in November, adding to expectations that US interest rates will rise later this month. Figures from the Labor Department showed the US economy created 178,000 jobs in November, while the jobless rate fell to 4.6% from 4.9% in October. The first employment report since voters went to the polls last month shows an economy in strong shape as President-elect Donald Trump prepares to take office. The unemployment rate fell to levels not seen since August 2007, before a bubble in the U.S. housing market began to burst. The fall was driven partly by the creation of new jobs and partly by people retiring and otherwise leaving the labor force. In addition, average hourly earnings in the US fell more-than-expected last month touching a seasonally adjusted -0.1%, from 0.4% in the preceding month. The data release comes ahead of the Fed's meeting, when the central bank is expected to announce its first interest rate increase in a year. Although wages fell slightly in November, many economists view the steady wage gains of the earlier months as a sign that a tightening labor market is allowing workers to demand higher pay, increasing pressure on the Fed to head off inflation by hiking interest rates.
Corporate lending in the Euro zone advanced at the fastest pace since June 2011 in October, while the total amount of currency in circulation fell, official figures showed on Monday. According to the European Central Bank, lending to firms rose 2.1% on a monthly basis in October, the fastest pace in more than five years, following the preceding month's gain of 2.0%. Lending to households climbed 1.8% on an annual basis in the same month, unchanged from the September reading, whereas market analysts anticipated a slight increase to 1.9%. A measure of the money supply in the region, known as M3, grew 4.4% year-over-year in October, down from the prior month's 5.1% and below the 5.0% increase market forecast. The Central bank's policymakers are widely expected to extend their quantitative easing program by six months at their next meeting on December 8. According to the OECD's latest forecasts published on Monday, the Euro zone is set to grow 1.7% in 2016 and 1.6% in 2016, both figures were revised up from the September estimates despite the post-Brexit uncertainties. Moreover, later on the same day, Mario Draghi said in his speech to the European Parliament that the economy managed to overcome major challenges caused by Britain's decision to leave the European Union.
Upcoming fundamentals: US ISM Non-Manufacturing PMI, Eurogroup meetings
Following the shock wave stemming from the Italian vote, some more market shakers could come along on Monday. Dudley's and Bullard's speeches will come at 13:30 GMT and 19:05 GMT respectively, with more uncertainty at 15:00 GMT when the US ISM Non-Manufacturing PMI data is announced. Eurogroup meetings happening all day could bring some significant news as well.
EUR/USD approaches 1.07 mark
Daily Chart: EUR/USD showed a 0.3% gap Monday morning, and went on to become a green candle in the making. The pair slid beneath the weekly S1 at 1.0581 with ease, and appeared to be targeting November lows at 1.0550. Given the scope of the early dive, it seemed like the rate could post significant losses this session and leave little to December 2015 lows at 1.0522. A close below this level would strengthen the bearish outlook and tackle levels unseen since March 2015 – a scenario that is starting to gain more and more ground as the set of daily and hourly channels go out of line. However, a quick reverse from the gloomy trend showed fundamentals dominating the market, which causes technical factors to lose our trust.Daily chart
Hourly chart: The hourly chart showed four red candles followed by five green ones Monday, suggesting that traders have ultimately chosen the US Dollar as their safe haven amid market uncertainty following the Italian referendum. Following a gloomy morning, the pair rallied through the 55, 100 and 200-hour SMAs with ease, along with a re-entry inside the bounds of the weekly channel it had broken before. In case respected, the channel will lead the rate towards the senior channel down pattern at 1.0769 which could then send the pair packing. However, this could as well be a retracement of the broken level, which would then lead to an extension of the downtrend.
Hourly chart
Sentiment remains bullish
SWFX traders have slightly mitigated their optimism , as 53% of open positions are now long, down from 54% on Friday. Meanwhile, pending orders are bearish, as 62% of pending commands are to sell the Euro.
OANDA traders increased their bullish outlook, as 60.63% of open EUR/USD positions were long on Monday morning, compared to 65.95% on Friday. In addition, SAXO Bank clients have also become less optimistic with 50.49% of all positions being bought, compared to 54.08% on the previous trading session.