- Pending orders in 100-pip range from the current market price are negative (34% bullish / 66% bearish)
- In case the pair increases in price, the closest resistance for it is located at 1.2204
- The downward movement is possible as well, while for that purpose the closest support is placed at 1.2137
- Upcoming events on January 2: Spanish Unemployment Change and Manufacturing PMI, Italian Manufacturing PMI, Eurozone Manufacturing PMI, US ISM Manufacturing PMI
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Italy's Economy Minister Pier Carlo Padoan shared an upbeat outlook by saying that the slowdown in the Euro zone's third biggest economy has ended. The Minister added that the government prepares a set of measures for approval in January to spur investment, including fiscal stimulus to prop up small companies. Padoan also said that the country's massive public debt, the second highest in the Euro zone, would start falling in 2016. His positive economic forecast was echoed in statistics data, which showed confidence in the nation's manufacturing sector rose again in December, with the corresponding index climbing to 97.5, up from a revised 96.5 a month ago.
Meanwhile, Spanish deflation intensifies, adding to challenges ECB Governor Mario Draghi faces to prevent the Euro zone economy from falling into deflationary spiral. Consumer prices in Spain fell 1.1% on year in December, according to a preliminary data. The index has been in a red territory since July, but this appeared to be the deepest decline so far. When measured on a monthly basis, consumer prices posted a -0.6% drop in the reported month, compared to November.
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European data to be released first after New Year's holidays
As markets are going to be closed on the first day of the year 2015, any changes are expected to take place only on January 2, when some important European statistical data will be published. First of all, Spanish statistical authorities will releases numbers on unemployment change and activity in the manufacturing industry of the country in December. This data will be followed by Italian and Eurozone's manufacturing PMI. Later, the US Institute for Supply Management will release the PMI indicator for production sector in the United States.Read More: Fundamental Analysis
EUR/USD to trade in the direction of 1.20
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 annual minimum at 1.2123, just before the year ended on December 30. Taking into account the present situation, the pair is likely to decline even more down to the 2012 low at 1.2040 in the medium-term and move in the direction of the major level at 1.20. On the other hand, there is a possibility of a rebound up to 1.2204 (weekly PP), before the leadership is finally overtaken by pair's bears.Daily chart
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Due to low trading volumes towards the end of the calendar year, even the most traded currency pair was a subject only to marginal changes on December 30. The EUR/USD pair remained well supported by the weekly S1 at 1.2137, which is reinforced by the 2014 low at 1.2123. We assume that there will be no major changes in the value of the pair at least until January 2. Despite the dense demand area from below, even the short-term bullish scenario is unlikely due to low activity of market participants at the moment.
Hourly chart
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Read More: Technical Analysis
Opened positions stay bullish, positive pending orders drop to 34%
Additionally, long pending orders in 100-pip range from the spot slipped to 34% from Tuesday's morning to hit its lowest level in three weeks. It implies that, in case the pair increases, in the medium-term the pair can be stopped by the weekly PP at 1.2204.
On the other hand, if the pair declines, the bearish pressure may extend down to the monthly S3/weekly S2, which is located at 1.2098.
Spreads (avg,pip) / Trading volume / Volatility
Community expects Euro to rebound against Greenback
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Read More: Community Forecasts
Panzer, one of the community members participating in the survey, motivates his bearish outlook towards the common currency by saying that the EUR/USD currency pair is still moving in one direction to the downside and the resistance lies around 1.25 double-top. He also adds that the "key support lies a little lower, at 1.2042, which is the low of July 2012 monthly candle."
Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between Nov 31 and Dec 31 expect, on average, to see the currency pair around 1.23 by the mid-March. Though the largest portion of participants, namely 23% of them, believe the exchange rate will drop down to the 1.22/1.20 region in ninety days. On top of that, the 32% 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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