- Share of long pending orders in 100-pip range advanced from 35% to 43%
- Long open positions are in the majority with 51%
- Bulls are waiting for momentum to be created by 100-day SMA
- Bears to push the pair below 55-day SMA at 1.1075 in case of optimistic US payrolls
- Economic events to watch in the next 72 hours: G-20 Meeting in Turkey; German Factory Orders (Jul); Euro zone Final GDP (Q2); US Non-Farm Payrolls, Average Hourly Earnings, Labour Force Participation and Unemployment Rate (Aug); FOMC Member Lacker Speaks
The ECB kept interest rates unchanged at record low in line with expectations. During his birthday conference, Mario Draghi, ECB President, said that renewed downside risks emerged to the growth and inflation outlook in recent weeks. Therefore, Draghi dropped a clear hint that the central bank could expand its QE programme, given the new downside risks, and pointing out that the asset-purchase programme is flexible, and the ECB could change the size, composition and duration of the programme. The central bank downgraded its growth outlook to 1.4% in 2015 from 1.5%, while inflation was expected to slide to negative territory in the months ahead, but due to lower oil and commodity prices rather than full-blown deflation.
The Euro zone retail sales returned to growth in July following a downwardly revised 0.2% decline in the preceding month. Retail turnover rose 0.4% on month in July, slightly missing economists' expectations for a 0.5% growth. Measured on an annual basis, retail sales surged 2.7% following the upwardly revised 1.7% growth in June. At the same time the bloc's services sector continued to expand last month, reinforcing the view economic recovery is taking hold. The final reading of the Euro zone's services PMI booked 54.4 points, compared with 54.0 in July. On top of that, Markit's composite PMI, which measures activity in the manufacturing and services sectors, climbed to 54.3 in August, up from 53.9 in the prior month.
Upcoming fundamentals: All eyes on US payrolls data today
On Friday the US Department of Labour will publish statistics on job creation and unemployment in August, which is likely to have the strongest impact on markets today. This will be the last employment report before the Federal Reserve meeting on Sep 17. When released at 12:30 GMT, payrolls are estimated to add 220,000 in August, while unemployment rate has probably fallen down from 5.3% to 5.2%.
EUR/USD slid down to 100-day SMA
EUR/USD was sold-off on Thursday, while posting negative reaction to the ECB's dovish comments. At the same time, a decline was not strong enough to push the Euro below the 100-day SMA at 1.1122. This level also guards next moving averages on 200 and 55-day time frames at 1.1093/75. Therefore, we do not see an immediate failure here. On the contrary, the pair confirmed the Aug 28 low, meaning that any recovery is quite unlikely to extend noticeably higher. Meanwhile, Friday's development is hugely dependent on US payrolls data later today.Daily chart
The one-hour chart shows the currency pair being sent the lower trend-line of the bullish channel. This fact is supporting bears at the moment, also mentioning that EUR/USD is hovering below both 200-hour SMA and 23.6% Fibonacci retracement at 1.1295/93, respectively. However, a location of 100-day SMA at 1.1122 (daily chart) makes the negative case less likely to be successful in the near term.
Hourly chart
SWFX sentiment positive, bullish pending orders below 50%
The share of bullish positions at OANDA amounts to 43.86% at the moment, while SAXO Bank market participants are more pessimistic towards the common currency, with their portion of longs taking up only 38% of all open trades on Friday, September 4.
Spreads (avg,pip) / Trading volume / Volatility
Community members expect Euro to resume growing versus the US Dollar this week
Despite EUR/USD's losses throughout the previous trading week, Dukascopy traders are still bullish with respect to the EUR/USD currency pair, as more than 57% of them see the Euro higher by September 4.
A proponent of a near-term growth, khalidamassi, suggests that "After strong move of EUR/USD last week to 1.17, then falling to 1.12, next week's recovery to 1.15 is very likely as the pair closed above 1.12 for the second week, but clear break below 1.12 will dampen expected bullish view for next week."