- Pending orders in 100-pip range from the current market price are strongly negative (29% bullish / 71% 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 7: German Retail Sales and Unemployment Change, Eurozone CPI Flash Estimate and Unemployment Rate, US ADP Non-Farm Employment Change, Trade Balance and FOMC Meeting Minutes
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Inflation in Germany fell to the lowest level in more than five years, increasing pressure on the European Central Bank to deploy fresh stimulus measures to avert deflation in the currency bloc. Consumer prices (HICP) in Europe's biggest economy declined to 0.1% in the last month of the year, down from 0.5% in November and against markets consensus of 0.2%. On a monthly basis, inflation came in at 0.1% in December. Slowing inflation in Germany provides the ECB Governor Mario Draghi with additional reason to start mass purchases of Euro zone government bonds, known as quantitative easing.
Meanwhile, the number of unemployed in Spain fell again in December, the Ministry of Employment and Social Security said. The number of registered workers without a job dropped by 64,400 in the reported month, following the 14,688 drop of registered jobless workers in November.
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European services PMI to be closely watched on Tuesday
The middle of the present working week will be especially important in terms of fundamental in the shared currency area. The Eurostat is going to announce the annual change in consumer prices in December, which is, according to some economists, likely to show a negative tendency for the first time since 2009. If this is the case, impact on the Euro is expected to be rather strong. Besides that, jobless rate in the Eurozone is predicted stay unchanged at 11.5% for November, while US employers have probably added 227,000 jobs in December.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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Yesterday, the EUR/USD currency pair was mostly unchanged, as it continued to hover above the major support level at 1.1940, represented by the monthly and weekly S1. It seems that this demand zone is strong enough to stop bears from pushing the pair down for some period of time. If the pair gets additional bullish impetus from here, it may advance up to 2012 low at 1.2040. Technical indicators, however, are giving aggregate neutral signals at the moment.
Hourly chart
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Opened positions stay bullish, long pending orders drop to 29%
Additionally, long pending orders in 100-pip range from the current market price dropped back to the negative side at 29% after staying at or above 50% for two days. It implies that, in case the pair increases, in the medium-term bearish pressure may stop the pair from climbing further around the 2014 low at 1.2096.
On the other hand, if the pair declines, the losses may potentially extend down to monthly S2 at 1.1781 during next few weeks.
Spreads (avg,pip) / Trading volume / Volatility
Community expects Euro to rebound against Greenback
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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 6 and Jan 6 expect, on average, to see the currency pair just above 1.22 by the end of April. Though the largest portion of participants, namely 36% of them, believe the exchange rate will drop down to the 1.22/1.18 region in ninety days. On top of that, the 21% of those surveyed reckon the price will fall below 1.18 by the end of the first quarter of the next year.
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