- Commands to buy the Euro versus the US Dollar in 100-pip range are negative (32% bullish / 68% bearish)
- The closest resistance for this pair is located at 1.0943
- At the same time, the closest support is currently placed at 1.0759
- Upcoming events on March 10: France and Italy Industrial Output (Jan), US Wholesale Inventories (Jan)
© Dukascopy Bank SA
The modest increase in Euro zone economic output at the end of last year was supported by rising investment and exports, raising hopes that the currency bloc's recovery will strengthen this year. According to Eurostat, the combined gross domestic product of the 18 countries that then use the Euro was 0.3% higher in the fourth quarter of last year than in the three months through September, marking a slight acceleration.
Meanwhile, German industrial output rose for a fifth straight month in January, adding to signs that the Europe's number one economy is gathering steam. In adjusted terms, production increased by 0.6% on a monthly basis, beating the 0.5% gain expectations, and following an upwardly revised December's figure of 1.0% rise.
Watch More: Dukascopy TV
No major news expected for second consecutive day on Tuesday
On the second working day of this week, fundamental part is going to remain rather silent, with hardly any important news forecasted to be published throughout the day. Among those news that are still going to be released, France and Italy will reveal a pace of increase in their industrial output for January. Moreover, US wholesale inventories have probably added 0.2% the same month. However, this data is unlikely to bring strong changes to the foreign exchange market tomorrow.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. On January 22, the ECB has made a long-awaited decision to expand its asset purchases by buying government bonds since March 9. The programme is likely to continue pushing the Euro downwards. Moreover, the lowest point since the year 2003 just above 1.08 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 decline below 1.05 towards the end of June. Short-term bullish actions may take place, but their impact and size are still expected to be inappropriate for the common currency to commence a stable recovery in the medium-term. Moreover, some market participants suggest it may fall further and even trade towards the parity in course of second half the year.Daily chart
© Dukascopy Bank SA
Strong expectations for successful QE from the side of the ECB had a major bearish impact on EUR/USD pair last Friday. The pair erased on of the most important supports at 1.0943 (monthly S2) and deteriorated below the 1.0850 mark. As a result, a daily decline amounted to around 200 pips. The next demand area is already represented by the 2003 low (1.0759); however, some rebound may follow shortly after a development before the weekend.
Hourly chart
© Dukascopy Bank SA
Read More: Technical Analysis
EUR/USD sentiment remain positive, pending orders stay in red
Additionally, SWFX traders are back to the negative territory in terms of pending orders, as the ones to buy the Euro against the US Dollar in 100-pip range from the spot have lost an additional one percentage point from Friday to just 32% this morning. It proclaims that in case the EUR/USD rises in value, a pair's potential rebound can be limited by the monthly S2 at 1.0943. On the other hand, a potential downward development of the Euro is considered to be extended down to the 2003 low at 1.0759.
Spreads (avg,pip) / Trading volume / Volatility
Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between Feb 9 and Mar 9 expect, on average, to see the currency pair around 1.13 by the end of June. Though the majority of participants, namely 54% of them, believe the exchange rate will drop below 1.12 in ninety days, with 25% alone seeing it below 1.08. Alongside, 22% of those surveyed reckon the price will trade in the range between 1.12 and 1.18 by the end of May of this year.
© Dukascopy Bank SA