- Pending orders in 100-pip range from the current market price are negative (46% bullish / 54% bearish)
- In case the pair increases in price, the closest resistance for it is located at 1.1781
- The downward movement is possible as well, while for that purpose the closest support is placed at 1.1737
- Upcoming events on January 16: Germany CPI (Dec), Eurozone Final CPI (Dec), Italy Current Account (Nov), US CPI (Dec), Industrial Production (Dec) and Philadelphia Fed Manufacturing Index (Jan)
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The European Court of Justice gave a non-binding opinion that the ECB's OMT programme is legal and compatible with the European law, despite the fact that the scheme's legitimacy was questioned by German economists and politicians. They claimed the central bank overstepped its authority and violated a European Union treaty ban on the ECB directly providing help to governments. The Outright Monetary Transactions was designed by the ECB Governor Mario Draghi in 2012 in order to save the Euro, but has never been implemented, partly due to legal objections expressed by German experts.
The opinion from Pedro Cruz Villalon, an advocate general with the European Court of Justice, is preliminary before the court's judges come to a decision later this year. The court does not have to necessarily follow his opinion. Nevertheless, it might also ease resistance to a similar programme that could be announced by the ECB Governor Mario Draghi as soon as January 22.
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Eurozone final inflation expected to be revised slightly upwards
According to major analysts' forecasts, consumer prices in the Eurozone have probably declined less than initially estimated by 0.1% on a monthly basis in December, while the annual CPI is likely to remain at minus 0.2%. This data is due to be announced tomorrow. Besides that, Germany will release its final consumer price index for the same month and will be followed by the US, where the core annual inflation has potentially dropped to 0.7% in December, down from 1.3% a month ago.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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Even though the overall daily change was rather small, EUR/USD pair showed one of the biggest volatilities at least during last seven days. Daily trading range reached 120 pips. Despite that, the cross is still hovering around the monthly S2 at 1.1780, waiting for more confident momentum to develop in any direction. Out outlook tends to remain bearish for the single currency, as it is supported by daily technical indicators which are negative at the moment.
Hourly chart
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Read More: Technical Analysis
Opened positions remain slightly bullish on EUR/USD
Meanwhile, pending orders to acquire the single currency versus the US dollar are remaining bearish, even though volatility from day to day is high, as longs have 46% of them at the moment (up from just 32% yesterday). It implies that, in case the pair increases in price, in the medium-term bearish pressure may stop the pair from climbing further around the weekly PP at 1.1857.
On the other hand, if the Euro declines, total losses may potentially extend down to 2005 low at 1.1639 in the foreseeable future.
Spreads (avg,pip) / Trading volume / Volatility
Community still expects Euro to decline against US dollar
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Read More: Community Forecasts
Ticker, 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 will decline due to potential quantitative easing measures of the ECB, totalled 500 billion euros, according to expectations. He also adds that the "Euro weakness is to continue this week (negative news help), US dollar is still on rise, while oil price drops till $45."
Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between Dec 15 and Jan 15 expect, on average, to see the currency pair around 1.21 by the end of April. Though the majority of participants, namely 56% of them, believe the exchange rate will drop down below this mark in ninety days. Alongside, 26% of those surveyed reckon the price will trade in the range between 1.21 and 1.26 by the end of April of this year.
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