- SWFX market sentiment is 55% bearish
- Pending commands in the 100-pip range 57% short
- Pair opened Monday's session at the 1.1135 level
- Aggregate daily technical indicators bet EUR/USD will depreciate
- Economic events to watch over the next 24 hours: EU PPI (May); US Independence Day
Factories across the US reported on a strong jump in production during June, being spurred by a accelerated foreign demand for US goods. According to the Markit release, the purchasing managers' index went up to 51.3 last month, up from 50.7 in May, thus reaching a three-month high. However, it is worth to point out, that the data was revised down slightly from the flash estimate of 51.4. The following numbers show that weakness in the April and May readings confirms that the second-quarter overall was the weakest since the third quarter of 2009, but there are still hopes that sector is stabilising. Moreover, there was a rise in new orders at the strongest pace since March, while export orders, in turn, ticked up at the fastest pace since September 2014. Overall, a slight softening in the dollar from the record levels being reached late last year and at the beginning of 2016 has helped US firms sell more goods abroad, while stabilization in the price of crude oil has helped factories connected to the energy patch. In the meantime, manufacturing trends will have relatively small impact on Federal Reserve policy decisions, since the Fed is more concerned with the reassurance that the industrial sector is showing signs of stabilisation.
The number of Americans filing for unemployment benefits rose last week, but remained below a level associated with a healthy labour market. Jobless claims increased by 10,000 to 268,000 in the week ended June 25, a report from the Labour Department showed. Economists had expected jobless claims to edge up to 266,000 from the 259,000 originally reported for the previous week. Continuing claims decreased for the third week in the last four. Meanwhile, the Labour Department reported the less volatile four-week moving average came in at 266,760, unchanged from the previous week's revised average of 266,750. The report also showed that a reading on the number of people receiving ongoing unemployment assistance fell by 20,000 to 2.120 million in the week ended June 18th, which is lower than the 2.15 million print penciled in by forecasters. Economists suggest this is a sign that the poor pace of jobs growth in April and May, which prevented the Federal Reserve from raising rates this month, was likely an aberration. It is unlikely for the labour market to slow down abruptly without a corresponding increase in layoffs, their reasoning goes. The next monthly employment report is scheduled for July 8.
Upcoming fundamentals: European PPI data
It is the fourth of July, and the US markets are closed for the holiday. In addition, no new US data will be published in the next 24 hours. However, the EU is also having a quiet Monday, as the only data set to be released at 9:00 GMT is the common Europan Union index of producer prices of industrial products, which most time can predict the future changes in the consumer price index. Experts forecast the monthly PPI change to be at 0.3%. Although, in a yearly time frame the forecast is set at negative 4.1%.
EUR/USD continues to fluctuate around 1.11 level on Monday
Daily chart: The common European currency has been fluctuating around the 1.11 level against the US Dollar for the past three trading sessions. However, the general trend is a slow surge of the Euro against the Greenback. The 1.11 level for the pair is located between the monthly pivot point from the upside at 1.1149 and a support cluster made up of the weekly pivot point and the 200-day SMA at 1.1092/1.1095. Daily aggregate technical indicators forecast a depreciation for the Euro against the Buck.Daily chart
Hourly chart: On the hourly chart it can be seen that the EUR/USD pair surged to the monthly pivot point at 1.1149 and passed it on Friday. However, the climb up was stopped by the 200-day SMA at 1.1154, against which the currency exchange rate bounced off and moved down to the 20-day SMA at 1.1112 by 14:00 GMT on Friday. Afterwards the pair kept bouncing up and down between the before mentioned cluster of resistance and the 20-day SMA's provided support.
Hourly chart
SWFX traders increase bearish sentiment
OANDA trader bearish sentiment has increased compared to Friday's 61.35%, as, at the moment, 61.61% of OANDA open positions are short. In addition, SAXO Bank clients have increased their bearish stance, as their open short positions are now at 63.54% compared to 61.44% of last trading session.