- SWFX market sentiment is 54% bullish
- Trader pending orders are 63% to sell
- Pair opened Monday's session at 1.0635
- Economic events to watch over the next 24 hours: German ZEW Economic Sentiment; Import Prices
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.
The Euro zone's bond markets tumbled shortly, while the Euro moved markedly higher after the European Central Bank signalled on Thursday that it would begin to cut back the stimulus program starting from April 2017. The ECB said it would lower its 80 billion euros monthly asset purchases to 60 million euros but prolong the QE asset buys until December next year, pointing to low inflation that, according to the latest forecasts, was projected to achieve only 1.7% in 2019. In the meantime, market analysts expected the Central bank to leave its asset purchases at the current levels for 6 more months. The Bank bought 1.4 billion euros in bonds since the start of the QE program. The ECB kept its inflation forecast unchanged at 0.2% for 2016 but revised it slightly up to 1.3% and 1.5% for 2017 and 2018, respectively. The Bank also left its benchmark and deposit rate at 0.0% and –0.4%, respectively, in line with economists' expectations. Overall, the Euro zone's recovery remained solid despite Britain's decision to leave the European Union and Donald Trump's surprise victory in the US presidential elections. After the announcement, the Euro initially jumped to 1.0875 against the US Dollar but failed to hold the momentum, falling back to 1.0753.
Upcoming fundamental data releases: German ZEW Economic Sentiment; Import Prices
Fundamental releases are unlikely to do much for the EUR/USD market as the German ZEW Economic Sentiment at 10:00 GMT as well as the US import prices at 13:30 GMT are unlikely to shake up markets significantly.
EUR/USD lacks levels in sight
Daily Chart: EUR/USD surprised with a second consecutive green candle Tuesday morning, after posting a one percent gain on Monday. The pair is currently testing the weekly Pivot Point at 1.0646, but the general sentiment remains bearish inside of a descending channel pattern. It appears that a close below 1.0550, the November low has not been sustainable just yet and Tuesday's session could either post a small green candle or a decent red one. Movements to the downside will be cut by 1.0566, the bottom Bollinger Band.Daily chart
Hourly chart: The hourly chart shows that the pair had developed an ascending triangle, then entered a consolidation phase and broken the bottom boundary of the pattern. The recent 100 and 200-hour SMA crossover sends a bearish signal, as does the break below the channel. It appears that the pair has already retraced from the trend-line and could now be eyeing levels below, such as 1.0626 and 1.0598/95. This set of developments confirms that a return inside of the previously broken channel up is unlikely.
Hourly chart
Sentiment remains bullish
Traders show less optimism with 54% of positions being long, down from 57% on Monday, while pessimism reflects in pending orders with 63% of short positions.
OANDA traders decreased their bullish outlook, as 57.12% of open EUR/USD positions were long on Tuesday morning, compared to 64.53 % on Monday. In addition, SAXO Bank clients have entered pessimistic territory with 44.38% of all positions being bought, compared to 51.71% on the previous trading session.