- Pending orders in 100-pip range from the current market price are positive (60% bullish / 40% bearish)
- In case the pair increases in price, the closest resistance for it is located at 1.2040
- The downward movement is possible as well, while for that purpose the closest support is placed at 1.1939
- Upcoming events on January 6: Spanish Services PMI, Italian Services PMI, Eurozone Services PMI, US ISM Non-Manufacturing PMI and Factory Orders
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Euro zone manufacturing remained sluggish in December, keeping pressure on the European Central Bank to deploy fresh stimulus to underpin moribund economy. The Markit Manufacturing Purchasing Managers' Index rose to 50.6, up from November's 16-month low of 50.1. For the three months of the final quarter of 2014, the PMIs were at their lowest level since the third quarter of 2013. There were fresh evidence the Euro bloc will not soon escape a period of sticky low inflation, as manufacturers once again cut their selling prices, while their costs dropped at the sharpest pace in eight months, reflecting falling oil prices.
On a country-by-country basis, activity in France's manufacturing sector fell at its fastest clip in four months in December, with a Markit PMI reading coming in at 47.5. The French manufacturing sector has remained in the contraction territory since May. Italian factories also saw their performance deteriorating in the reported month, as the manufacturing PMI declined to 48.4 in December, while analysts had projected a reading of 49.5 and following November's print of 49.0.
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European services PMI to be closely watched on Tuesday
On the second day of the present working week, several countries of the Eurozone will publish numbers on activity in the service sectors of national economies, which are considered as the most important by their contribution to the GDP. As a result, the major news is going to come from Spain and Italy, which will be followed by the Eurozone's composite services PMI. Meanwhile, later the same day the US Institute for Supply Management will release the similar indicator for the world's biggest economy.Read More: Fundamental Analysis
EUR/USD sets 2005 low as new long-term goal
The long-term outlook for the EUR/USD currency pair is remaining bearish both in short and long-term. Additionally, the cross has recently managed to reach the lowest point of the previous year at 1.2096, just before it ended on December 31. Moreover, 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 down to 2005 low at 1.1639 in the medium-term, even though a short-term rebound up to 1.21 is not excluded. Moreover, analysts suggest that in case of Eurozone's QE later this year the single currency may fall further and trade towards 1.10.Daily chart
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Last Friday, the EUR/USD currency pair dropped considerably, as it reached the major level of 1.20 and crossed a number of important support lines, including the 2012 low at 1.2040. Moreover, the opening level in the morning of Monday was located just above the next cluster of supports, which is located around 1.1930 (monthly and weekly S1). If the pair manages to cross this area, we may suggest it will plummet down to 2010 low at 1.1874 in the next few days.
Hourly chart
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Read More: Technical Analysis
Opened positions stay bullish, pending orders jump noticeably
Additionally, long pending orders in 100-pip range from the current market price climbed to 60%, the biggest level seen during last 11 working days. It implies that, in case the pair increases, in the medium-term the pair is likely to extend gains up to the 2014 low at 1.2096.
On the other hand, if the pair declines, the bearish pressure can be stopped by the 2010 low/weekly S2 at 1.1874/53.
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 5 and Jan 5 expect, on average, to see the currency pair just above 1.22 by the end of April. Though the largest portion of participants, namely 20% of them, believe the exchange rate will drop down to the 1.22/1.20 region in ninety days. On top of that, the 38% 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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