- Pending orders in 100-pip range from the current market price are negative (38% bullish / 62% bearish)
- In case the pair increases in price, the closest resistance for it is located at 1.1631
- The downward movement is possible as well, while for that purpose the closest support is placed at 1.1466
- Upcoming events on January 20: Germany ZEW Economic Sentiment (Jan) and Producer Price Index (Dec), Italy Trade Balance (Nov)
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Among fundamental news, German inflation fell to a dangerously low level in December, providing the ECB Governor Mario Draghi with more prerequisite to launch a full-blown bond-purchasing programme during the board meeting on January 22. Consumer prices in Germany, the heartland of QE-opposition, slowed to just 0.2% in December, the lowest level in more than five years, and averaged 0.9% for the whole 2014.
Earlier in the week, Jens Weidmann, the Bundesbank President and a member of the ECB Governing Council, reiterated his opposition to QE programme, despite the opinion of the European Court of Justice that the OMT programme is legitimate, which in fact gives a green light to Draghi's QE. Weidmann underscored that the ECJ's view also showed that the ECB has to act with its legal boundaries in its decisions and measures.
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German economic sentiment to determine EUR/USD's moves on Tuesday
On Tuesday of this week, markets will be closely watching data from Germany, where the ZEW Institute will publish a fresh index of economic sentiment in the Eurozone's largest economy for January. Later on, the same indicator will be announced for the whole currency bloc. It is expected to rise further, following some weakness in times of strong uncertainty provided by EU-Russia economic sanctions. Therefore, a positive impetus for the Euro is likely to take place after numbers are released.Read More: Fundamental Analysis
EUR/USD's drop to continue in the long-term
The long-term outlook for the EUR/USD currency pair is remaining bearish both in short and long-term. All market attention in the upcoming two weeks will be paid to the ECB's meeting on January 22 and Greek parliamentary elections on January 25. The EUR/USD cross has recently managed to reach the lowest point of the year 2005 at 1.1639. Generally, in January the pair continued declining well-below the 1.20 major level. Taking into account the present situation and bearish outlook for the Euro, the pair is likely to drop confidently below 1.15 towards the end of January, even though a short-term rebound back up to 1.17-1.18 is still possible. Moreover, analysts suggest that in case the Eurozone's QE takes place later this year the single currency may fall further and trade towards 1.10.Daily chart
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A considerable plunge of the EUR/USD pair continued back on Friday. The single currency declined even below the 1.15 major level and crossed an important support provided by the monthly S3 at 1.1466. However, towards the end of trading pair returned back to close at 1.1561. In the short-term, there is a potential for the cross to rebound up to the weekly pivot point/2005 low around 1.1635. Despite that, the medium and long-term outlook tends to remain strongly bearish for the Euro.
Hourly chart
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Read More: Technical Analysis
Opened positions on EUR/USD remain slightly bullish at SWFX
Meanwhile, pending orders to acquire the single currency versus the US dollar are remaining bearish, even though volatility from day to day is high, as longs have only 38% of them at the moment (up 2% during weekend). It implies that, in case the pair increases in price, in the medium-term bearish pressure may stop the pair from climbing further around the weekly S1 at 1.1631.
On the other hand, if the Euro declines, total losses may potentially extend down to the weekly S1 at 1.1391 in the foreseeable future.
Spreads (avg,pip) / Trading volume / Volatility
Community still expects Euro to decline against US dollar
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Read More: Community Forecasts
Ticker, 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 will decline due to potential quantitative easing measures of the ECB, totalled 500 billion euros, according to expectations. He also adds that the "Euro weakness is to continue this week (negative news help), US dollar is still on rise, while oil price drops till $45."
Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between Dec 19 and Jan 19 expect, on average, to see the currency pair below 1.20 by the end of April. Though the majority of participants, namely 58% of them, believe the exchange rate will drop down even more below this mark in ninety days, with 17% alone seeing it below 1.12. Alongside, 25% of those surveyed reckon the price will trade in the range between 1.20 and 1.26 by the end of April of this year.
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