- SWFX market sentiment is 68% bearish (-1%)
- 59% of pending orders in 100-pip range are to BUY the Euro
- 70% of total pending commands are to sell the Euro
- Upcoming events: Eurozone's PPI m/m, Italy's Preliminary CPI m/m, US Average Hourly Earnings m/m, US Non-Farm Employment Change, US Unemployment Rate, US Revised UoM Consumer Sentiment, FOMC Member Williams to speak
The Sterling rose markedly against the US Dollar ahead the report on the UK manufacturing sector. Thought, weaker-than-anticipated data dampened USD/GBP with the exchange rate falling 11 base points or 0.08% initially.
Britain's manufacturing sector lost some strength in growth momentum last month, as factory activity was held back by common weakness in the country's economy in preparation for Brexit. The Markit/CIPS reported that the UK Manufacturing PMI fell to 55.3 in January, the lowest level in seven months, but still above the 52.7 long-term average. Relatively strong figures suggested that manufacturing outlook is likely to remain bright on behalf of exports.
US fundamentals prevail
Friday's trading session is start with Eurozone's PPI and the Italian Preliminary CPI at 1000GMT. The rest of this session is reserved for fundamentals from the US, such as the monthly Average Hourly Earnings, Non-Farm Employment Change, Unemployment Rate and Revised UoM Consumer Sentiment. The first three are to be released at 1330GMT, while the last one – at 1500GMT.
This session will end with the President of the Federal Reserve Bank of San Francisco John William who is due to speak about the US economic outlook at the Financial Women of San Francisco luncheon.
EUR/USD forms new high
Thursday's session was market by strong upside momentum that allowed the common European currency to appreciate 96 pips against the Greenback.The morning was spent with low volatility that seemed to point to a period of consolidation. However, a test of the weekly PP was followed by a notable surge up to the 1.2520 mark as a result of which the Euro surpassed the 1.25 mark and formed a new 1,5-year high. Bulls might still succeed at pushing the rate slightly higher; however, the weekly R1 at 1.2575 is unlikely to be breached.
The base scenario favours the rate approaching the support area formed by the 55-, 100– and 200-hour SMAs in the 1.2440/00 range. Meanwhile, the following week might mark a breakout of this cluster and a subsequent fall.
Hourly Chart
Following five days of consolidation, the Euro managed to shoot up against the US Dollar on Thursday. However, it seems that this bullish momentum might not continue in this session, as the pair has been trading flat in the morning. Thus, it is likely that the Euro tries to approach its nearest support on the daily chart – the weekly PP at 1.2394.
Daily Chart
Traders are strongly bearish
SWFX market sentiment is standing at 68% short positions.
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 increasingly bearish on the pair, as 64% of open positions are short (+4%). Saxo Bank clients are likewise bearish on the pair with 64% short positions (+2%).
Spreads (avg, pip) / Trading volume / Volatility