- SWFX market sentiment is 67% bearish (-1%)
- 51% of pending orders in 100-pip range are to SELL the Euro
- 70% of total pending commands are to sell the Euro
- Upcoming events: ISM Non-Manufacturing PMI, ECB President Draghi to testify
The Greenback strengthened against the European single currency, as Friday's report revealed that hiring in the US accelerated. The EUR/USD exchange rate lost 31 base points or 0.25% to the 1.2460 mark.
The job growth in the US increased in January, while wages surged further, recording the strongest annual growth in more than eight years, fuelling expectations that consumer inflation would push higher in 2018, as the job market reaches full employment. The Labour Department stated that non-farm payrolls rose 200K positions last month. Meanwhile, the jobless rate remained at the lowest level in 17 years of 4.1%. Strong data underscored robust growth momentum, encouraging the Fed to be more aggressive in hiking interest rates in 2018.
Draghi to testify at 1600GMT
Two fundamental events should be noted in this session, namely, the US Non-Manufacturing PMI for the month of January and the testimony by the ECB President Mario Draghi on the Bank's Annual Report for 2016 before the European Parliament at 1500GMT and 1600GMT, respectively.
EUR/USD likely to re-test 1.25
EUR/USD lacked volatility on Friday morning, as it remained located relatively close to the 1.25 mark. This situation changed mid-session when solid US employment data strengthened the Greenback against major currencies, including the Euro. The pair was subsequently trading sideways, as the 55– and 100-hour SMAs bounded the Euro from both sides.In terms of patterns, the rate breached a short-term trend-line mid-Friday and continued to trade in a new junior channel. This steep formation, however, should not hold any longer, as strong upside momentum is unlikely today.
The Euro is expected to find support near the 100– and 200-hour SMAs and the weekly PP circa 1.2435 and cap its gains around the 2015/17 high of 1.2540.
Hourly Chart
Following a strong climb on Thursday, the Euro closed the previous trading week with a 55-pip fall against the US Dollar. The pair showed some signs of recovery on Monday morning and, given the strong support apparent on the hourly chart, is likely to push even higher.
By and large, rate continues to edge higher towards the upper boundary of a long-term channel up. In line with this pattern, traders might see it appreciating up to 1.28; however, this might not be the case if the pair continues to consolidate near the 1.25 mark during this week.
Daily Chart
Market sentiment is strongly bearish
The bearish market sentiment has decreased to 67% short positions in this session (-1%).
In the meantime, the outlook for the two currencies against the rest of the traded financial instruments is as follows: the Euro is 70% bearish and the US Dollar is 62% bullish.
OANDA traders remain bearish, as 64% of open positions are short (+0%). Saxo Bank clients are likewise bearish on the pair with 64% short positions (+0%).
Spreads (avg, pip) / Trading volume / Volatility