- Pending orders in 100-pip range from the current market price remain slightly negative (49% bullish / 51% bearish)
- In case the pair increases in price, the closest resistance for it is located at 1.2468
- The downward movement is possible as well, while for that purpose the closest support is placed at 1.2400
- Upcoming events: Eurozone's Final CPI, FOMC Statement, US Federal Funds Rate
© Dukascopy Bank SA
Almost two weeks after releasing updated inflation and growth outlook, the German Bundesbank said the Brent crude prices had since plummeted 11% on average below the forecast estimates. Consequently, the central bank admitted it would have to revise downwards its 2015 inflation forecast if recent drops in oil prices persist. Currently, the Bundesbank expects inflation of 1.1% next year, while the November HICP reading for Germany came in at 0.6%, the lowest reading since February 2010.
The Bundesbank has, in what is considered as an unexpected move, supported the European Central Bank's view on taking further stimulus measures to bolster the Euro zone economy if needed, though the German central bank did not openly back up the ECB's quantitative easing. The German central bank's language surprised analysts, as Bundesbank Chief Jens Weidmann had previously reiterated the need of more reforms in Euro zone countries as the main tool for fuelling growth and has been reluctant to endorse quantitative easing.
Watch More: Dukascopy TV
Markets to wait for Fed's decision on interest rates on Wednesday
In the middle on the present trading week, all attention will be paid to the Federal Reserve, which is holding its scheduled monthly meeting in order to make a decision on interest rates and announce perspectives of the monetary policy. It is very likely that the all USD crosses will be rather vulnerable to any decisions, forward guidance or comments of the regulator. Besides that, the Eurozone's final CPI for November will be released tomorrow, along with US inflation for the same month.Read More: Fundamental Analysis
EUR/USD to trade around 1.24 during next few days
The long-term outlook for the EUR/USD remains bearish, even though the currency pair has recently breached the long-term downtrend line, which used to be a considerable resistance for the cross. Moreover, it has reached the December high at 1.2494. However, any negative impetus will push the cross down below this important level, with a long-term goal located at 1.2246 (2014 low) for the time being. From the upside, the next major supply zone is placed around the 1.26 level (23.6% Fibo, Bollinger band, 55-day SMA). Nevertheless, we would assume the EUR/USD pair is going to consolidate around the 1.24 mark for some period of time.Daily chart
© Dukascopy Bank SA
EUR/USD cross was pretty much unchanged during the first day of the new week, even though it managed to rise above the significant resistance line, represented by the monthly pivot point at 1.2468. Eventually, the pair returned back to trade below this level. We assume this resistance to be rather strong for EUR/USD's bulls to cross it; therefore, we expect a gradual decline of the pair in the foreseeable future.
Hourly chart
© Dukascopy Bank SA
Read More: Technical Analysis
Both opened positions and pending orders remain bearish
Bullish pending orders in 100-pip range from the current market price registered almost no changes, compared to Monday's morning, as they remained on the negative territory with 49% of total. It implies that, in case the pair gains value, in the medium-term it may be stopped by the 55-day SMA at 1.2546.
On the other hand, if the pair declines, the bearish pressure is likely to strengthen and extend losses below the weekly pivot point at 1.24.
Spreads (avg,pip) / Trading volume / Volatility
Community expects Euro to preserve bearish momentum
© Dukascopy Bank SA
Read More: Community Forecasts
RacerX, one of the community members participating in the survery, motivates his bearish bias towards the common currency by saying that the ECB "will put off further action until the beginning of next year". He also does not suppose "there will be any major shifts in the fundamentals" and added that "any neutral news will only continue to strengthen the dollar".
Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between Nov 16 and Dec 16 expect, on average, to see the currency pair at 1.2328 by the mid-March. Though the largest portion of participants, namely 26% 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.
© Dukascopy Bank SA