- Commands to buy the euro versus the dollar in 100-pip range from spot turned to be slightly positive (51% bullish / 49% bearish)
- In case the pair increases in price, the closest resistance for it is located at 1.1391
- The downward movement is possible as well, while for that purpose the closest support is placed at 1.1220
- Upcoming events on January 24-26: Greece Parliamentary Elections, Germany Ifo Business Climate (Jan), Eurogroup Meetings (Dec)
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Super Mario did not let market participants down, as he announced full-blown QE programme in an ambitious attempt to save the Eurozone's economy from being trapped in long-term economic stagnation. The European Central Bank agreed to purchase government bonds worth 60 billion euros a month, which is slightly more than was expected by many analysts, who had called for 50 billion euros a month.
The ECB will be buying government bonds, debt securities issued by European institutions and private-sector bonds starting from March 2015 till at least September 2016. Such a decision would pump large amounts of money into the financial system that could then be used by banks and other lenders to boost available credit. Consequently, that could spur consumer spending and act as a support to economic growth.
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Next euro threat approaches as Greece holds election on Sunday
Following one very important event this week, namely the ECB's decision to start the quantitative easing programme, the next crucial day is approaching. Greece is holding the parliamentary election on January 25, which poses a high risk for political and economic instability in this country. According to opinion polls, the left-wing coalition of parties SYRIZA is likely to win most of the seats in the lower house, and it plans to abandon some austerity policies of previous years. Therefore, this event may have a further strong effect on the common currency on Monday's morning.Read More: Fundamental Analysis
EUR/USD's drop to continue in the long-term
The long-term outlook for the EUR/USD currency pair is remaining bearish both in short and long-term. 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 1.1315 has been hit by EUR/USD cross. Taking into account present monetary conditions and bearish outlook for the euro, the pair is likely to drop confidently below 1.12 towards the end of the first quarter of this year. Short-term bullish actions are still possible, but their impact and size are not expected to be appropriate for the euro to commence a stable recovery. Moreover, some market participants suggest the single currency may fall further and even trade towards the parity in course of the year 2015.Daily chart
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EUR/USD pair plummeted noticeably on Thursday, as the ECB unveiled a plan to buy 60 billion of securities monthly until September 2016, including government bonds. The cross dropped around 300 pips, from 1.1610 down to 1.1340 on Friday's morning. As a result, it has crossed two major support areas at 1.1460 and 1.1390. Therefore, the mid-term outlook for single currency will remain strongly bearish and a rebound is highly unlikely in the near term.
Hourly chart
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Read More: Technical Analysis
Long opened positions turn to neutral
Meanwhile, pending orders have turned to be slightly positive this morning as more traders believe the pair may now rebound after yesterday's drop. The share of longs increased from 33% to 51%. It proclaims that, in case the pair increases in price, in the medium-term bearish pressure may stop the pair from climbing further around the weekly S1 at 1.1466.
On the other hand, if the euro declines, total losses may potentially extend down to the weekly S1 at 1.1220 in the foreseeable future.
Spreads (avg,pip) / Trading volume / Volatility
Community still expects Euro to continue falling versus US dollar
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AdamFx42, one of the community members participating in the survey, motivates his bearish outlook towards the common currency by saying that the EUR/USD "has been hit hard by the Swiss announcement of taking away the cap. The already bearish pair failed to hold 1.1560 monthly support area." As a result, he assumes the pair will decline down to 1.15 towards the end of this week.
Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between Dec 23 and Jan 23 expect, on average, to see the currency pair around 1.17 by the end of April. Though the majority of participants, namely 47% of them, believe the exchange rate will drop down even below 1.16 in ninety days, with 27% alone seeing it below 1.12. Alongside, 27% of those surveyed reckon the price will trade in the range between 1.16 and 1.22 by the end of April of this year.
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