- Pending orders in 100-pip range from the current market price are negative (39% bullish / 61% bearish)
- In case the pair increases in price, the closest resistance for it is located at 1.2338
- The downward movement is possible as well, while for that purpose the closest support is placed at 1.2107
- Upcoming events: US Unemployment Claims and Crude Oil Inventories
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According to the Governor of Belgium's central bank, Luc Coene, the European Central Bank should begin purchasing government bonds to boost investor confidence and combat falling inflation rates in the Euro region. Coene said that if consumer prices slid to the deflationary spiral, the impact on households' and businesses' behaviour will be extremely negative.
Meanwhile, the ECB Vice President Vitor Constancio expects the Euro zone inflation rate to fall into the negative territory in the coming months, stressing that the central bank's current inflation expectation of 0.7% for 2015 is outdated, as oil prices plunged as much as 15% since the December inflation forecast. Annual inflation in the 18-nation region eased to 0.3% in November as energy prices dropped, putting it well below the ECB's goal for inflation close to but just below 2%. While falling oil prices should support growth and drive up inflation in the longer term, it creates a challenging situation in the short term.
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No major data to be published as Christmas approach
Due to approaching Christmas period, European and American markets are mostly going to be closed for several days. However, December 24 will still bring some fundamental data, which can have influence particularly on the EUR/USD currency pair. It includes the weekly unemployment claims for the week ended December 19, as well as crude oil inventories. On the European side there are no fundamental news expected on Wednesday.Read More: Fundamental Analysis
EUR/USD approaches 1.22
As the long-term outlook for the EUR/USD currency pair has been remaining bearish for the last couple of weeks, the cross managed to reach a new minimum of this year at 1.2219. At the moment it is also trading below the long-term downtrend line, even though two weeks ago the pair traded above it and was showing bullish signs. However, more hawkish approach from the Fed is reflected by the Dollar's upside movement. Taking into account the present situation, the pair is likely to decline even more down to the monthly S3 at 1.2098 in the long-term. On the other hand, there is a possibility of a rebound up to 1.23, before the leadership is finally overtaken by pair's bears.Daily chart
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On the first day of this working week, the EUR/USD cross decided to stay pretty much unchanged, as it continued to trade in the vicinity of the monthly S2 and 2014 low around 1.2220. It should be noticed that these two lines may play a role of the sustainable support in order to push the pair higher. This scenario has a chance to become a reality, as the closest resistance is located only at 1.2340. Despite that, short-term technical studies remain mixed.
Hourly chart
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Read More: Technical Analysis
Long positions rise further, orders remain broadly unchanged
Additionally, long pending orders in 100-pip range from the spot decreased to 39%, the level seen on Friday of last week. It implies that, in case the pair increases, in the medium-term the pair can be stopped by the monthly S1/weekly PP at 1.2338.
On the other hand, if the pair declines, the bearish pressure may extend down to the monthly S3, which is located at 1.2098.
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 23 and Dec 23 expect, on average, to see the currency pair at 1.2328 by the mid-March. Though the largest portion of participants, namely 28% of them, believe the exchange rate will drop down to the 1.22/1.20 region in sixty days. On top of that, the same number of those surveyed reckon the price will fall below 1.20 by the end of the first quarter of the next year.
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