- SWFX market sentiment is 61% bearish
- 55% of pending orders in 100-pip range are set to SELL
- Two-year high located at 1.2093
- Upcoming Events: US Non-Farm Employment Change, Average Hourly Earnings, Unemployment Rate, ISM Non-Manufacturing PMI and Euro Zone CPI Flash Estimate
The Euro continued to advance against the Dollar, as expected. Today's macro data release provides good opportunity to test the two-year maximum at 1.2093 once again. An increasing bearish sentiment suggests that this barrier will sustain.
The US private companies added 250K positions in December, the strongest monthly gain since March, the ADP Research Institute revealed on Thursday. The figures came in ahead of the official Labour Department's report, which includes both private and public-sector employment. The jobless rate is expected to remain at 4.1% in the same month. Separately, Markit said that the country's services sector activity softened at a weaker-than-anticipated pace, with PMI falling from 54.5 to 53.7 points in December, but still in the expansion range.
Labour market data
By tradition, the first Friday of a new month is marked by release of information on the American labour market, which includes the Unemployment Rate, Employment Change an Average Hourly Earnings Index. The data release will happen 13:30 GMT. High volatility is expected (especially on USD/CAD currency pair).
EUR/USD reaches weekly R1 at 1.2074
In accordance with expectations, the common European currency continued to rise against the Dollar and by the end of the previous has reached the weekly R1 at 1.2074. In the meantime, the pair has also formed a minor bullish pennant pattern, which presupposes further surge towards the two-year extremum located at the 1.2093 mark. Although today's release of information on the American labour market provides good opportunity for a breakout, the currency rate is still expected to make a rebound and return back to the rising 55- and 100-hour SMAs. A one-week long junior ascending channel supports this assumption. In addition to that, 54% of pending orders in 50-pip range are set to buy.Hourly Chart
At first glance it seems that the pair will not manage to jump above the 1.2100-1.2160 area, as it represents not only the two-year maximum but also the upper boundary of a long-term ascending channel. The above pattern suggests that the upcoming year the currency rate is likely to spend in a downtrend. However, the fact that the Euro remains strong suggests that the rate might actually break to the top and continue heading towards even larger slope located around the 1.2300-1.2500 mark.
Daily Chart
Market sentiment is bearish
In result of the previous trading session the bearish market sentiment has increased, as 61% of open positions are short.
In the meantime, the outlook for the two currencies against the rest of the traded financial instruments is the following: the Euro is 65% bearish and the Dollar is 58% bullish.
Traders of OANDA remain bearish, as 70% of open positions are short. SAXO Bank clients are likewise bearish on the pair with 65% (+2%) short positions.
Spreads (avg, pip) / Trading volume / Volatility