- SWFX market sentiment is 55% bearish
- Pending commands in the 100-pip range 57% short
- Pair opened Tuesday's session at the 1.1144 level
- Aggregate daily technical indicators bet EUR/USD will depreciate
- Economic events to watch over the next 24 hours: Spain PMI Services (June); Italy PMI Services (June); French PMI Services (June); French PMI Composite (June); German PMI Services (June); German PMI Composite (June); EU PMI Services (June); EU PMI Composite (June); EU Retail Sales (May); US Durable Goods Orders (May); Fed's Dudley Speaks
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 PMIs and US Durable Goods Orders
With the start of a new month, European countries are releasing the PMI indices. First of all Spain releases its PMI Services index at 7:15 GMT. Next up will be Italy with also just the PMI Services index at 7:45 GMT. Afterwards, countries with stronger economies will release PMI for services and composite indices, as the French will release their data at 7:50 GMT and the Germans at 7:55 GMT. As the countries finish publishing the data, the common EU composite and services PMI indices will be released at 8:00 GMT. In addition, the EU will release the monthly and year-to-year retail sale changes for May at 9:00 GMT. From the other side of the Atlantic, US Durable Goods Orders changes for May will be published at 14:00 GMT. Last but not least today, the Fed's Dudley is set to give a speech at 18:30 GMT.
EUR/USD moves lower on Tuesday
Daily chart: The Euro hit the resistance provided by the monthly pivot point at 1.1149 against the US Dollar, at the end of yesterday's trading. However, on Monday morning, the currency exchange rate has bounced off the resistance, as the pair moved to the level of 1.1129 by 5:30 GMT. If the rate continues a downfall, it will face a combined support of the 200-day SMA and weekly PP at 1.1092. A downward movement is also supported by the daily aggregate technical indicator forecast.Daily chart
Hourly chart: The hourly chart shows that the EUR/USD pair did not exactly bounce off the monthly PP 1.1149. The Euro went pass the monthly PP against the USD, and it continued to surge for two hours until it bounced off the upper Bollinger band at 1.1160. Since then the currency exchange rate has moved through the support provided by the monthly pivot point and various SMAs, among which are the 20, 55 and 200-hour SMAs. However, by 6:15 GMT the pair was highly volatile and kept moving between the 55 and 200-hour SMAs around the level of 1.1125.
Hourly chart
SWFX trader sentiment unchanged
OANDA trader bearish sentiment has decreased compared to Monday's 61.61%, as, at the moment, 61.18% of OANDA open positions are short. In addition, SAXO Bank clients have decreased their bearish stance, as their open short positions are now at 62.44% compared to 63.54% of last trading session.