- Pending orders in 100-pip range from the current market price changed to positive (67% bullish / 33% bearish)
- In case the pair increases in price, the closest resistance for it is located at 1.24
- The downward movement is possible as well, while for that purpose the closest support is placed at 1.2246
- Upcoming events: German PPI, Eurozone's Current Account, Italian Retail Sales, Kansas Fed Manufacturing Activity, Fed's Evans Speech
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Eurostat confirmed that Euro zone's consumer prices rose 0.3% in November from the same month last year on falling fuel and heating oil prices, which subtracted 0.22 percentage points from the final result. Measured on a monthly basis, inflation in the Euro bloc fell 0.2%, compared with a 0.1% decline in October. Excluding energy, food, alcohol and tobacco, core consumer prices rose 0.7% in November.
A growing number of economists are concerned that the Euro area could slip into deflation next year, as falling oil prices add to the disinflationary pressures in the region. Many economists expect the ECB to expand its asset-purchase programme early next year, which might include sovereign bonds buying. However, the central bank's governing council remains split by disagreement over the necessity of more actions now, with some policy makers preferring to remain in a wait-and-see mode to assess the full effect of recent monetary easing measures. Nevertheless, the ECB said it will reassess the existing stimulus policies, which include cheap bank loans as well as purchases of asset-backed securities and covered bonds, in early 2015, and decide whether to step up efforts to ensure that annual inflation moves closer to the goal of just below 2%.
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No major drivers for Euro to be published on Friday
It seems that Friday will not bring any influential fundamental data both from the Eurozone and US, following active data releases' period in the middle of the current working week. All in all, traders could only pay attention to the German producer price index and the Eurozone's current account balance, which are still likely to have only minor effect on the shared currency.Read More: Fundamental Analysis
EUR/USD returns back to 1.23
As the long-term outlook for the EUR/USD currency pair remains on the negative side, the single currency is likely to trade in the direction of the 2014 low for the next couple of days. Meanwhile, it is also possible that the most traded pair will set a new yearly low before the New Year starts. At the moment it is trading below the long-term downtrend line, even though for the past week the pair traded above it and was showing bullish signs. However, more hawkish approach from Fed pushed the Dollar to the upside. In case the annual minimum is crossed, the pair is likely to decline even down to the monthly S3 at 1.2098 in the long-term. From the upside, in turn, it is currently limited by a strong resistance area around 1.2550.Daily chart
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On Wednesday, the EUR/USD experienced notable changes during the trading session, especially following hawkish news from the Fed on future interest rates. The currency pair momentarily dropped down to the monthly S1 at 1.2339, while on Thursday's morning a decline continued and the Euro is already trading below 1.23 versus the Greenback. Even though technicals are neutral on a daily chart, we expect the pair to reach 2014 low at 1.2246 quite soon.
Hourly chart
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Read More: Technical Analysis
Opened positions stay bearish, pending orders climb
Following a significant decline of the pair, pending orders jumped in both ranges from the spot, while 67% of them in 100-pip range are now set to acquire the Euro versus the Buck. It implies that, in case the pair increases, in the medium-term gains may extend up to the monthly R1 at 1.2579.
On the other hand, if the pair declines, the bearish pressure can be decreased by the 2014 low, which is located at 1.2246.
Spreads (avg,pip) / Trading volume / Volatility
Community forecasts Euro to lose ground against Greenback
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Read More: Community Forecasts
MrSami, one of the community members participating in the survey, motivates his bearish bias towards the common currency by saying that there are only two weeks left before the year ends and the pair is likely to hit the 2014 low soon. On the other hand, the trader adds that in case the the pair fails to cross the 1.2310 support, then "a pullback up to 1.27 levels may be expected".
Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between Nov 18 and Dec 18 expect, on average, to see the currency pair at 1.2328 by the mid-March. Though the largest portion of participants, namely 25% of them, believe the exchange rate will drop down to the 1.22/1.20 region in sixty days. On top of that, 28% of the surveyed reckon the price will fall below 1.20 by the end of the first quarter of the next year.
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