EUR/USD above 1.11 level on Friday

Note: This section contains information in English only.
Source: Dukascopy Bank SA
  • SWFX market sentiment is 55% bearish
  • Pending commands in the 100-pip range 58% short
  • Pair opened Friday's session at the 1.1115 level
  • Aggregate daily technical indicators bet EUR/USD will remain unchanged
  • Economic events to watch over the next 24 hours: EU CPI (June); US CPI (June); US Retail Sales (June); US Empire State Manufacturing (June); US Capacity Utilization (June); US Industrial Production (June); UoM Confidence Preliminary (July); Fed's Kashkari Speaks.
The Euro starts Friday with a surge, which, if remains maintained, will become the fifth consecutive session with booked gains against the US Dollar. Most recently, the Bank of England announced that they will not change their rates in the aftermath of Brexit. As such event was not expected by market participants, the Euro was affected also. However, after fluctuating by around 60 pips, the EUR/USD pair returned to previous levels in four hours after the announcement.

The number of Americans filing unemployment benefits remains unchanged compared to the previous week, demonstrating the lowest level since April, giving a hint that labour market started to recover amid a shaky global economy. According to the Labour Department, initial claims for state unemployment benefits were unchanged at a seasonally adjusted 254,000 for the week ended July 9. Also, following tendency left claims close to a 43-year low of 248,000 touched in mid-April. Economists, in turn, had expected jobless claims to reach 265,000 from the 268,000 originally reported for the June. Taking into consideration week-to-week volatility, the four-week moving average slipped to 259,000 compared to the last week's average of 264,750. In the meantime, according to the Energy Information Agency, the natural gas storage advanced more-than-expected in June. Natural gas stocks went up by 64 billion cubic feet for the week ending July 8. Analysts, in turn, were expecting a storage addition in a range of 55 billion to 65 billion cubic feet. Meanwhile, the five-year average for the week is an injection of around 77 billion cubic feet.

On Thursday, the Bank of England surprised markets by holding interest rates, despite hints from Governor Mark Carney that policy easing could be possible made earlier. Economists had expected a rate cut of 25 points to 0.25%, which would have been the first rate change in seven years. Following assumptions appeared after the Brexit referendum on 23 June, when Britons widely vote to leave the European Union. According to the minutes of the meeting, the Bank's Monetary Policy Committee voted by 8-1 to hold rates, as well as hinting that they "expect monetary policy to be loosened in August". Moreover, the BoE announced in its policy statement that they would give another month to evaluate the Brexit's impact on the economy and probably would raise stimulus measures in August. Currently, the bank's benchmark rate equals 0.5%. Following decision is widely appreciated by economists, since many experts are saying the Bank made the right decision by leaving interest rates unchanged. In the meantime, the Pound advanced while shares, in turn, dropped after the Bank of England unexpected decision. The Cable added around 1.4%, or two cents, versus the dollar reaching $1.3326.

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Upcoming fundamentals: EU CPI and lots of US data

On Friday there is only one data release coming from the EU, as EU CPI for June will be published at 9:00 GMT. The rest of the data on Friday will come from the other side of the Atlantic Ocean. First will be the US CPI at 12:30 GMT, which will be available in monthly and yearly timeframes, with or without food and energy. At the same time, US Retail sales for June will also be released. Moreover, Empire State Manufacturing index will be out at 12:30 GMT. Afterwards, at 13:15 GMT US Capacity Utilization and Industrial Production will be released for June. Another important data release will be UoM Confidence Preliminary index for June at 14:00 GMT. The day will end at 5:15 GMT, as Fed's Kashkari will have a discussion with St. Louis Fed President James Bullard, in St. Louis.



EUR/USD surges for fifth consecutive session

Daily chart: Fully ignoring all aggregate technical indicators, which kept forecasting a decline, the Euro has been appreciating against the US Dollar the whole week, as it starts Friday's session with more gains against the Buck. In addition, the common European currency touched and for a moment went past the resistance cluster located above it, which consists of the monthly PP at 1.1119 and weekly R1 at 1.1157, as on Thursday the currency exchange rate at one moment was at 1.1164. However, daily aggregate technical indicators forecast no changes for the pair today.

Daily chart
© Dukascopy Bank SA

Hourly chart: The hourly chart in general shows a slow surge of the Euro against the US Dollar, with one exception. At 11:00 GMT on Thursday the Bank of England announced, that it will not change its rate in as the consequences of the Brexit are still unclear. On these news the Euro jumped around 60 pips. However, in the next hour, the currency exchange rate declined by 50 pips and in the following two hours it returned to the level it was before the announcement. Since then, the currency rate was slowly surging.

Hourly chart
© Dukascopy Bank SA


SWFX traders bearish on Friday

SWFX traders are still bearish on the pair, as 55% of open positions are short. In the meantime, pending orders are also bearish, as 58% of pending orders in the 100-pip range are short.

OANDA trader bearish sentiment has decreased compared to Friday's 62.29%, as, at the moment, 60.65% of OANDA open positions are short. In addition, SAXO Bank clients have slightly decreased their bearish stance, as their open short positions are now at 61.79% compared to 61.84% of last trading session.

Spreads (avg,pip) / Trading volume / Volatility



Average forecast says EUR/USD will trade at 1.11 by September

Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between June 15 and July 15 expect, on average, the currency pair around 1.11 by the end of September. Though 61% (-1%) of participants believe the exchange rate will be generally below 1.12 in ninety days, with 38% (-1%) alone seeing it below 1.08. Alongside, only 24% of those surveyed reckon the price will trade in the range between 1.12 and 1.18 on September 30.

© Dukascopy Bank SA

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