Employment data from ADP really turned out to be worse than forecasts, largely justifying the most terrible assumptions. Not only that, employment growth amounted to 135 thousand, instead of 140 thousand, the previous data was also revised from 195 thousand to 157 thousand. The dollar began to lose its position even before the publication of the data, as it became known that the previous data were reviewed for the worse side. However, in general, the fluctuations were not so significant, and at the end of the day, the growth of the single European currency can be safely called symbolic.
Although the report of the United States Department of Labor is published tomorrow, we won't be given a breath, as the day will be extremely busy. It will all begin with the publication of totals for business activity indices in Europe. In particular, the index of business activity in the services sector should decrease from 53.5 to 52.0, and the composite index from 51.9 to 50.4. Naturally, even closer approximation of the indices to the boundary value of 50.0 points will have a negative impact on investor sentiment. However, the misfortunes for the single European currency do not end there, as after that the data on retail sales are published, the growth rate of which may slow from 2.2% to 1.9%. But do not forget about the recent history of inflation, when its unexpectedly strong slowdown in Germany led to the fact that throughout Europe as a whole, inflation slowed down and did not remain unchanged. So, the latest data on retail sales in Germany showed an incredibly sharp slowdown in their growth rates. So we can safely expect that the data on retail sales will be significantly worse than forecasts, which are not optimistic anyway.
Retail Sales (Europe):
Then comes the turn of US statistics, which, recently, clearly looks better than that of the EU. Of great interest is the data on applications for unemployment benefits, the total number of which should be reduced by 3 thousand. But then again, if you recall the ADP data, there is a possibility that they will turn out to be worse than forecasts. No less important are the final data on business activity indices. Thus, the index of business activity in the service sector can grow from 50.7 to 50.9, and the composite index from 50.7 to 51.0. However, data on production orders, which should be reduced by 0.2%, complete the block of US statistics.
Markit Composite Business Activity Index (US):
However, it should be borne in mind that it is a holiday in Germany, so market volatility will clearly be limited.
Nevertheless, the EUR/USD pair managed to pull back from the lows of the current year, but the potential for the bulls was not so great and stagnation has already occurred around 1.0965. In fact, we did not see any cardinal change, and the pullback was local in nature. Considering what is happening in general terms, we see a consistent development of a downward trend, with fairly rational clock phases. There are no prerequisites for changing the main course.
It is likely to assume that today we are waiting for a rather interesting amplitude fluctuation, where the single currency may be under pressure at the beginning, returning the quotation to the 1.0930 area, but closer to the end of the trading day, a return to 1.0965 may occur.
Concretizing all of the above into trading signals:
• Long positions, we are considering already in the event of a stop and subsequent development in the area of 1.0930.
• Short positions, we consider in case of price consolidation below 1.0950, with the prospect of a move to 1.0930.
From the point of view of a comprehensive indicator analysis, we see that the main sector of indicators on hourly and daily periods signal selling. In turn, minute intervals alternately signal upward interest, but the quote is currently moving in narrow consolidation.
