- Commands to buy the Euro versus the US Dollar in 100-pip range from the spot are bearish (40% long / 60% short)
- The closest resistance for this pair is located at 1.1294
- At the same time, the closest support is currently placed at 1.1244
- Upcoming events on June 18: Eurogroup Meeting in Luxembourg, ECB Economic Bulletin, ECB Targeted LTRO, US Unemployment Claims (Jun 12) and CPI (May)
© Dukascopy Bank SA
German investor confidence declined for a third consecutive month in June amid uncertainty over the Greek debt default. The ZEW Economic Sentiment Index, covering the economic outlook of about 350 respondents for the six months ahead, dropped to 31.5 in the reported month, down from May when the reading came in at 41.9 points. That was the lowest level since November 2014. In addition to that, the Current Situation Indicator came in at 62.9 in the reported month, declining from May's 65.7 and compared with analysts' forecast of 63 points.
A separate report showed that the annual gauge of inflation in Germany rebounded in May, growing for the fourth consecutive month. The German CPI gained 0.7% year-on-year in May, compared to the 0.5% pace of growth seen in April, according to Destatis. On a monthly basis, the CPI added 0.1%, following no growth seen a month before.
Watch More: Dukascopy TV
US inflation to pick up in May after UK rebound
Inflation reading in the US is likely to rebound, while the average analysts' expectation stays at 0.2% for May of this year, up from -0.2% earlier in April. The core reading, which excludes food and energy, is forecasted to remain flat at 1.8% on the annual basis. This data is going to be released along with the initial jobless claims for the week ended June 12 on Thursday at 12:30 PM GMT. Meanwhile, the Eurogroup is meeting tomorrow in Luxembourg, which is considered to be one of the last places, where the Greek deal can still be negotiated.Read More: Fundamental Analysis
EUR/USD likely to lose value, trading range to narrow down
Judging from EUR/USD's developments that took place since May of the previous year, the pair is clearly trading downwards on a long-term chart. At the same time, it seems that now the pair is being bounded between the 2014 low and long-term downtrend line, meaning that it is currently hovering inside the descending triangle pattern. Moreover, this pattern implies a narrowing trading range, while the break-out point can be reached by the end of August. In the medium-term the common European currency may surge up to the 1.1330 mark where long-term downtrend is able to push the cross back in the direction of 1.05-1.10 area. However, the pair can also assume a possibility of growing as high as 200-day SMA around five figures above the downtrend, before finally making a decision to commence a bearish correction.Daily chart
© Dukascopy Bank SA
Despite an attempt to grow beyond the 23.6% Fibonacci retracement (May 2014 - Mar 2015), the EUR/USD pair was rejected by this level and the long-term downtrend around 1.1340. Moreover, the bullish market remains limited by the recent high around 1.1385. Therefore, the short-term outlook for the Euro is mildly bearish, but the neutral scenario is also possible, especially considering mixed daily and weekly technical indicators.
Hourly chart
© Dukascopy Bank SA
Read More: Technical Analysis
EUR/USD sentiment flat for eight day, long orders fall back
Meanwhile, pending orders to buy or sell the Euro against the US Dollar in 100-pip range from the spot price declined substantially from yesterday, down by 13% to 40% on Wednesday morning.
It proclaims that in case the EUR/USD rises in value, the pair's near-term gains can be capped by the long-term downtrend around 1.1340. On the other hand, a downward development of the Euro is likely to be extended down to the 20-day SMA, currently at 1.1192.
Spreads (avg,pip) / Trading volume / Volatility
Community suggests the Euro will show mixed performance against the US Dollar this week
© Dukascopy Bank SA
Read More: Community Forecasts
STARLINE, one of the community members participating in the survey, motivates his bearish outlook towards the single currency by saying that "Despite the positive data from the US, the Euro is trying to maintain the bullish trend, still testing the support line at 1.1200. If you resist the decline in the short term we could see an attempt to test the resistance at 1.1470."
Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between May 17 and Jun 17 expect, on average, to see the currency pair around 1.10 by the end of September. Though the majority of participants, namely 58% of them, believe the exchange rate will trade below this mark this level in ninety days, with 27% alone seeing it below 1.06. Alongside, only 16% of those surveyed reckon the price will trade in the range between 1.10 and 1.16 by the end of September of this year.
© Dukascopy Bank SA