- SWFX market sentiment is 40% bullish
- Trader pending orders are 59% to sell
- Pair opened Friday's session at the 1.1208 level
- Aggregate daily technical indicators bet EUR/USD will remain unchanged
- Economic events to watch over the next 24 hours: French Flash Manufacturing PMI (Sep); French Flash Services PMI (Sep); German Flash Manufacturing PMI (Sep); German Flash Services PMI (Sep); EU Flash Manufacturing PMI (Sep); EU Flash Services PMI (Sep); US Flash Manufacturing PMI (Sep).
The number of Americans filing for unemployment benefits fell sharply last week, official figures revealed on Thursday. According to the US Department of Labor, initial claims for jobless benefits dropped 8,000 to a seasonally adjusted rate of 252,000 in the week ended September 16, touching the lowest level since mid-July. Meanwhile, market analysts expected initial jobless claims to rise to 261,000 last week from the preceding week's 260,000. Filings for US unemployment benefits remained below the 300,000 level for the 81st consecutive week, the longest streak since 1973. The four-week moving average of initial claims, considered a better measure of labor market trends, declined 2,250 to 258,500 last week. The US Dollar Index, which measures its strength against a trade-weighted basket of six major currencies, fell 0.45% to 95.03, the lowest level since September 12, despite upbeat data. Other data released by the National Association of Realtors (NAR) showed sales of previously owned US homes unexpectedly declined to a seasonally adjusted annual rate of 5.33 million units in August, following the previous month's 5.38 million unit pace and falling behind the 5.45 million unit rate market forecast. The drop was mainly driven by a shortage of properties for sale as it lifted home prices higher.
According to the official figures, industrial production across the 19-country Euro zone slipped by 1.1% in July, showing a development that could seriously weigh on the region's third-quarter growth. It is worth to point out that industrial production in the single currency region has been highly volatile for the last months, jumping in some and slumping in others. But overall, during the last 12 months it has declined, a key source of weakness for the UK economy that has struggled to create jobs and now are facing strong uncertainties after the UK's June vote to leave the European Union. In the meantime, the production of capital goods decreased by 1.7%, while energy production was 1.4% lower and durable consumer goods production lost 0.7%. The production of intermediate goods, in turn, was down 0.5% while production of non-durable consumer goods was unchanged.
Upcoming fundamentals: Flash PMIs
The EUR/USD currency exchange rate on Friday is set to be affected by the release of Flash Manufacturing and Services PMI data from various countries. The French release is set for 7:00 GMT, and the data is forecasted to show a decline in the Manufacturing sector and growth in Services. Germans will publish their PMI data at 7:30 GMT, and both sectors are forecasted to have grown. Later on, at 8:00 GMT the combined EU PMI data will be released, and experts predict that both sectors have grown. There is only one data release occurring in the US during Friday's trading session, and it will be the US Flash Manufacturing PMI at 13:45 GMT. However, it is most unlikely that it will have a notable impact on the financial markets.
EUR/USD ready for a surge on Friday
Daily chart: The common European currency was preparing to surge to the 1.1240 level against the US Dollar on Friday morning. Previous session the currency pair already reached above the 1.1240 level, where the weekly R1 is located at. However, the rate retreated from the first weekly resistance after it reached above it, and on early Friday morning the currency exchange rate reached a support cluster below it and began a rebound, as the cluster is located from 1.1202 to 1.1190 and consists of both weekly and monthly pivot points and the 100-day SMADaily chart
Hourly chart: The hourly chart for the EUR/USD pair shows that, as the yellow metal broke through the weekly and monthly pivot points and the 200-hour SMA around the level of 1.12, the rate jumped to 1.1226 at 6:00 GMT. Afterwards, the currency exchange rate was slowed down by the upper Bollinger band at 7:00 GMT. By 13:00 the rate had reached above the weekly R1 at 1.1240, and there it changed its direction and retreated to the weekly pivot point at 1.1195. Since then, the currency pair has been bouncing above the pivot.
Hourly chart
Traders are steadily bearish
SWFX traders remain bearish, as 60% of open positions are short on Friday. In the meantime, pending commands are also bearish, as 59% of set up orders are to sell.
OANDA traders remain slightly bearish on the pair, as 52.52% of open positions are short. In addition, SAXO Bank clients have increased their bearish stance, as open short positions now add up to 64.12% compared to 62.93% on the previous trading session.