EUR/USD nears 2014 low

Source: Dukascopy Bank SA
"Pending orders in 100-pip range from the current market price are negative (33% bullish / 67% bearish). It is likely that the pair will increase in price, with the closest resistance for it located at 1.2339 and is represented by the monthly S1 and weekly pivot point. At the same time, the downward movement is possible as well, while for that purpose the closest support is placed at 1.2271 and is represented by the 2014 low." 

© Dukascopy Bank SA
On the last day of the previous working week, the shared currency lost the most value against the US dollar, decreasing by 0.78% in its pair with this currency. At the same time, the overall situation for the Euro was mixed, as it dropped and advanced versus the same number of currencies and was unchanged against the Swiss franc. The sharpest increase in value, in turn, was registered in the pair with the Japanese yen, namely by 0.65%.

The German Bundesbank has revised Germany's economic growth outlook for the next year downwards to 1%, exacerbating concerns the Euro zone's economy will continue to struggle. Germany's central bank now expects the nation's economy will grow 1.4% this year, 1% in 2015 and 1.6% in 2016. In contrast, in June, it had projected growth of 1.9% this year, 2% next year and 1.8% in 2016. The European Commission also lowered its forecast for German economic growth next year from 2% of GDP to just 1.1%. Hopes earlier this year that Germany would lead the 18-nation currency bloc to recovery have waned, after signs that momentum in the region's economic growth engine have been disappearing. The Bundesbank also slashed its projections for inflation to 1.1% next year, and 1.8% in 2016. Inflation in the Euro area as a whole dropped to 0.3% in the year to November, well below the European Central Bank's goal of below but close to 2%.

Meanwhile, German factory orders unexpectedly rose in October, offering a positive sign amid recent bleak data. Factory orders jumped 2.5% on month in October, the German Economics Ministry said, following the upwardly revised 1.1% gain recorded in the previous month. On an annual basis, factory orders increased 2.4% in the month under review, compared with the predictions of zero growth.








German trade balance to influence Euro on Tuesday

Among important data, which is going to be released on Tuesday of this week, traders can pay attention to the German trade balance, which is the day's most important statistics in the region. Analysts predict the surplus to remain unchanged at 18.5 billion euros for October of this year. In addition, the EcoFin will hold the scheduled meeting in Brussels tomorrow.
© Dukascopy Bank SA

EUR/USD set for decline after confirmation of triangle pattern

The long-term outlook for the EUR/USD remains bearish, as the cross has been moving downwards since the beginning of July and on December 3 has eventually breached the triangle pattern to the south. Moreover, it has reached a new 2014 low at 1.2271. Any negative impetus will push the cross down below this important level, with a long-term goal at 1.2098 (monthly S3). At the same time, right now the pair is also limited by the monthly pivot point at 1.2468 from the upside.

Daily chart
© Dukascopy Bank SA

From the perspective of an hourly chart, the EUR/USD currency pair has just approached the recently-set 2014 low at 1.2271. It is likely that bears will try to test this level on Monday. If successful, the pair may decline down to monthly S2 in the short-term, which is also reinforced by weekly S1 at 1.22. In case of failure, we would assume the Euro to increase in value, at least up to monthly S1 around 1.2340 during the trading day.

Hourly chart
© Dukascopy Bank SA

EUR/USD spreads (avg, pip) and volatility

© Dukascopy Bank SA







Market sentiment holds above 50% level

Distribution between bullish and bearish opened positions remains slightly positive at the moment, as 53% and 47% of them are long and short, respectively. Pending orders in both 50 and 100-pip ranges from the spot price are almost on the same level, with only 32-33% of them are set to buy the Euro. It implies that, in case the pair gains value, in the medium-term it may be stopped by the monthly S1 / weekly PP and is likely to be pushed to the downside by this important resistance level. However, if the pair declines, the bearish pressure may become even stronger in the foreseeable future.

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