- Commands to buy the euro versus the dollar in 100-pip range from spot returned back to negative territory (37% bullish / 63% bearish)
- In case the pair increases in price, the closest resistance for it is located at 1.1439
- The downward movement is possible as well, while for that purpose the closest support is placed at 1.1268
- Upcoming events on February 6: Germany Industrial Production (Dec), France Budget Balance (Dec) and Trade Balance (Dec), US Non-Farm Payrolls (Jan) and Unemployment Rate (Jan)
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Despite a decline of the common currency, a bunch of positive news came out from the Euro zone on Wednesday, as retail sales in the currency bloc rose for the third month in a row in December, while Markit's composite PMI, a measure of activity in the manufacturing and services sectors, climbed to 52.6 in January from 51.4 in the preceding month. The PMI gauge was revised upwards from a preliminary estimate of 52.2, and pointed the Euro zone economy expanded at the fastest pace since July 2014.
Moreover the indicators, which assess performance of the services sectors in Germany, Italy and Spain, rose in January, while France's services sector slipped back into contraction territory in the reported month with the services PMI at 49.4. On top of that, retail sales in the 19-member region picked up by 0.3% from November, following the 0.7% increase in the previous two months.
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Germany's December manufacturing data expected to rebound
Following the unexpected contraction of German industrial production in November 2014, the indicator is forecasted to resume rising by showing a 0.4% increase in December, calculated on a monthly basis. Fuelled by French budget and trade balance data, this statistics may have influence on the shared currency on Friday. From American side, growth in non-farm payrolls has most probably cooled marginally in January, while the jobless rate is projected to stay unchanged at 5.6% for the same month.Read More: Fundamental Analysis
EUR/USD set to weaken in the long-term
The long-term outlook for the EUR/USD currency pair is remaining bearish. The ECB has made a long-awaited decision to expand asset purchases back on Jan 22, which will continue pushing the Euro to the downside. Moreover, the lowest point since the year 2003 around 1.1113 has already been hit by EUR/USD cross. Taking into account present monetary conditions and bearish outlook for the Euro, the pair has a chance to go below 1.10 towards the end of the first quarter of this year. Short-term bullish actions may take place, but their impact and size are not expected to be appropriate for the common currency to commence a stable recovery in the long-run. Moreover, some market participants suggest it may fall further and even trade towards the parity in course of this year.Daily chart
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On Wednesday, EUR/USD used to be one of major underperformers on the foreign exchange. Pair declined by exactly the same amount it advanced two days ago. Monthly PP was strong enough to push the Euro to the downside, while weekly R1 failed to ease bearish pressure that dominated on the market. Despite the move, daily technical indicators see a further decline of the common currency from the current 1.1350 mark.
Hourly chart
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Read More: Technical Analysis
Pending orders on EUR/USD return back to red zone
At the same time, after a short-term rebound SWFX commands to acquire the Euro in 100-pip range plunged back below 50% threshold level to hit the 37% mark. It means that, in case the pair increases in price, in the medium-term gains are likely to be limited by the weekly R1 at 1.1439.
On the other hand, if the Euro declines, total losses have a chance to be extended down to the weekly S1 at 1.1114 in the medium-term.
Spreads (avg,pip) / Trading volume / Volatility
Community is waiting for the Euro to rebound by February 7
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Read More: Community Forecasts
transhuman, one of the community members participating in the survey, motivates his positive outlook towards the common currency by saying that "there is a wide range of support building up, and it is primed to push pair upwards". He also supposed that the overall situation for the pair will "coincide with an overall decline in the US Dollar and a relative decline of US stock market".
Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between Jan 5 and Feb 5 expect, on average, to see the currency pair around 1.13 by the end of May. Though the majority of participants, namely 54% of them, believe the exchange rate will drop down even below 1.12 in ninety days, with 25% alone seeing it below 1.08. Alongside, 20% of those surveyed reckon the price will trade in the range between 1.14 and 1.20 by the end of May of this year.
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