- Pending orders in 100-pip range from the current market price are neutral (50% bullish / 50% bearish)
- In case the pair increases in price, the closest resistance for it is located at 1.2096
- The downward movement is possible as well, while for that purpose the closest support is placed at 1.2028
- Upcoming events on January 3-5: German Retail Sales and Prelim CPI, US Total Vehicle Sales
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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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German inflation and retail data to drive Euro after weekend
In the beginning of the first full working week of 2015, trading volumes and market activity are likely to increase considerably. Therefore, reactions on important fundamental news are expected to be rather strong. On Monday, German statistical office Destatis will publish data on retail sales and inflation in the biggest economy of the Eurozone. Later, Autodata Corp. numbers will show, how many vehicles US car dealers sold in December on the annual basis, which is assumed as an important indicator for health of the US economy.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 the lowest point for the year 2014 at 1.2096, just before the year ended on December 31. Taking into account the present situation, the pair is likely to decline even more down to the monthly S1 at 1.1939 in the medium-term and move in the direction of the 2010 low at 1.1874. On the other hand, there is a possibility of a rebound up to 1.2254 (monthly PP), before the leadership is finally overtaken by pair's bears.Daily chart
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On December 31, the EUR/USD currency pair dropped considerably and set a new low of the year 2014 at 1.2096. Moreover, a decline of the pair did not stop there, and in the morning of January 2 the Euro has already fallen down to the 2012 low at 1.2040. This level, however, is strengthened by the weekly S3 twelve pips below. If it fails to hold the bearish pressure, we may see the cross slipping down to the monthly S1 at 1.1939. Technical indicators, however, are now giving mixed signals on all time-frames.
Hourly chart
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Read More: Technical Analysis
Opened positions stay bullish, pending orders change to neutral
Additionally, long pending orders in 100-pip range from the spot rose to 50% during the New Year break, the highest level in ten trading days. It implies that, in case the pair increases, in the medium-term the pair can be stopped by the weekly S1 at 1.2136.
On the other hand, if the pair declines, the bearish pressure may extend down to the monthly S1, which is located at 1.1939.
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 Dec 2 and Jan 2 expect, on average, to see the currency pair around 1.23 by the end of April. Though the largest portion of participants, namely 22% of them, believe the exchange rate will drop down to the 1.22/1.20 region in ninety days. On top of that, the 35% 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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