Monday, August 1, 2016

EUR/USD breaking out and moving lower.

The euro is unchanged on Monday, following sharp gains in the Friday session. EUR/USD is currently trading at 1.1170. On the release front, manufacturing PMIs are in focus in both the Eurozone and the US. German Manufacturing PMI came in at 53.7, while Eurozone Manufacturing PMI showed a reading of 52.0. Both figures were very close to the estimates. Later in the day, the US will release ISM Manufacturing PMI. Little change is expected in the July reading, with an estimate of 53.1 points.
The euro gained closed to 100 points on Friday and closed the week at 1.1170, its highest level since the Brexit vote in late June. The euro took advantage of a surprisingly soft US GDP report. Preliminary GDP for the second quarter was projected at 2.6%, but posted a much smaller gain of 1.6%. The soft reading not only pushed the dollar lower, but has dampened enthusiasm regarding a rate hike by the Fed, which last week stayed on the sidelines yet again.EUR/USD ratio showed gains in long positions on Friday, consistent with strong gains by EUR/USD on Friday. Short positions have a strong majority (63%), indicative of trader bias towards EUR/USD breaking out and moving lower.