- SWFX market sentiment is 52% bullish
- Pending commands in the 100-pip range 65% short
- Pair opened Monday's session at the 1.0971 level
- Aggregate daily technical indicators bet EUR/USD will depreciate
- Economic events to watch over the next 24 hours: German IFO data (June)
As markets expected, the European Central Bank (ECB) kept its key interest rates on hold on Thursday, but signaled that it is prepared to add more monetary stimulus later in the year. The main refinancing rate was left at 0%, whereas the ECB interest rates on the deposit facility and the marginal lending facility remained unchanged at -0.40% and 0.25%, respectively. The central bank slashed its deposit rate deeper into negative territory in March. In a news conference, Mr. Draghi said the Brexit vote had added to "headwinds" for the Euro zone economy, that include broader geopolitical uncertainty. Mario Draghi, President of the European Central Bank, also confirmed that the monthly asset purchases of 80 billion euros may run beyond the current deadline of March 2017, if necessary. Furthermore, the central bank's President highlighted that the governing council may provide more stimulus at its next meeting in September, as new post-Brexit forecasts for economic growth and inflation will be available by that time. Meanwhile, analysts polled by Reuters slashed their growth forecast for the Euro zone to 1.3% from 1.6%, but left inflation projections unchanged at 1.3%
Euro zone and European Union consumer confidence fell markedly in July, the European Commission reported releasing its monthly indicator, in a new sign of weaker morale after the 23 June British vote to leave the European Union. The European Commission's flash estimate showed that the mood of shoppers in the currency bloc decreased by 0.7 points to minus 7.9 in July from an upwardly revised minus 7.2 in June. That was lower than the minus 7.3 points estimated by markets. The marked drop in July follows a slight fall in June and two consecutive rises in April and May. Meanwhile, the figures for the European Union as a whole showed a much worse drop of 1.8 points to -7.6, a level not seen in two years. The indicator for the bloc as a whole is now below the Euro zone indicator for the first time in years. A lot of economists believe that if this trend continues, the decline in confidence threatens to weaken the bloc's already modest economic recovery. Propelled by a gradual decline in unemployment and lower energy prices, growth has been driven by rising consumer spending over recent quarters, while demand for exports has been slowing.
Upcoming fundamentals: German IFO data
As it is customary on a Monday, there is little data set to be released today. The only data release, which will affect the Eurodollar is the German IFO indicators. It consists of three parts, as first is the IFO Business Climate index. Second is the IFO Current Assessment, and last but not least is the IFO Expectations index. All of them will be published at 8:00 GMT.
EUR/USD falls below 1.10 on Friday
Daily chart: The common European currency reached new post-Brexit lows against the US Dollar on Friday. The currency exchange rate started day's trading at 1.1025 and Friday's trading session at 1.0974. On Monday morning the currency pair started day's trading session slightly lower at 1.0972, and it traded at 1.0976 by 5:00 GMT. However, during the first hours of the new week of trading, the pair was more volatile to the downside, as it had touched the 1.0951 level. If the EUR/USD pair does fall during the session, it is set to meet with the newly formed first weekly support at 1.0926.Daily chart
Hourly chart: On the hourly chart it can be seen that the EUR/USD pair was continuing to fluctuate on Friday until 14:00 GMT, when it moved below the 20 and 55-hour SMAs at 1.1070 and plunged to 1.0970 by 15:00 GMT. In addition, the pair fell even more in the following hours, as it touched the 1.0955 level. Afterwards, the currency exchange rate kept fluctuating within a 25 pip range. However, it has been steadily surging on Monday morning.
Hourly chart
SWFX sentiment remains bullish on Monday
OANDA trader bearish sentiment has decreased compared to Friday's 53.85%, as, at the moment, 50.78% of OANDA open positions are short. In the meantime, SAXO Bank clients have decreased their bearish stance, as their open short positions are now at 50.51% compared to 53.52% of last trading session.