EUR/USD: Edges slightly higher testing short-term technicals

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Yesterday’s drop meant prices were kept shy of its bear trend line, though some of those losses have been undone as of writing this morning thanks to risk appetite slightly bid. The bond market showed yields in for a climb in the previous session, and in energy closely watched Dutch TTF rising a bit off fresh lows made a day earlier.

Eurozone economic data showed services out of S&P for the bloc a miss and failing to reach expectations of slight expansion, with a contracting 48.8 reading instead and the overall composite at 48.1. For Germany, services were worse than estimates and registered a contracting 45, its global composite also below expectations, at 45.7. Prior to that, we got German trade data, and it showed its surplus worsen from €5.4 billion to €1.2 billion and well below €4 billion estimates, as although exports rose m/m (month-on-month) for August by 1.6%, imports were up by a larger 3.4%.

Out of the US, economic data there showed services PMI best estimates (ISM at 56.7 with a stronger reading for its employment component at 53 and new orders at 60.6 and prices paid to drop to 68.7, but S&P’s estimate a contracting 49.3), a big drop for weekly mortgage applications by 14.2% an ongoing worry for the housing sector there.

We've got a few items on offer today including the European Central Bank’s minutes and German factory orders before attention shifts to tomorrow's US Non-Farm Payrolls (NFP) report that tends to cause traders to at least briefly shelve technicals going into the usually market-moving event. ADP’s non-farm estimate yesterday showed a 208K increase, and expectations are for an NFP print of 265K.

EUR/USD technical analysis, overview, strategies, and levels

We had a move yesterday that briefly breached its previous 2nd Support level, in all aiding conformist sell-breakout strategies on the move past its previous 1st Support that stopped out contrarian buy-on-reversals. Overall, the technical overview remains that of a bear average in this time frame due to the larger bear channel that can tilt short-term technicals depending on where prices reside within it. The weekly time frame’s technical overview remains a stalling bear trend.

IG client* and CoT** sentiment for EUR/USD

As for retail trader bias, it has shifted back to majority buy from slight sell 52% yesterday, and at 57% as of this morning. It’s a bit higher than where CoT speculators were positioned last week with a slight buy of 54%, with fresh readings on offer tomorrow out of the CFTC.

EUR/USD chart with retail and institutional sentiment

*The percentage of IG client accounts with positions in this market that are currently long or short. Calculated to the nearest 1%, as of today morning 8am for the outer circle. Inner circle is from the previous trading day.
**CoT sentiment taken from the CFTC’s Commitment of Traders report, outer circle is latest report released on Friday with the positions as of last Tuesday, inner circle from the report prior.