- Commands to buy the euro versus the dollar in 100-pip range from spot are staying strongly negative (31% bullish / 69% bearish)
- At the moment, the closest resistance for the pair is located at 1.1332
- In case of development to the south, the closest support is currently placed at 1.1117
- Upcoming events on January 28: US Crude Oil Inventories (Jan 23), FOMC Federal Funds Rate and FOMC Statement, Germany GfK Consumer Climate (Jan)
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Greece's anti-austerity Syriza party won the general election on Sunday. Now the big question is whether Greece will stay in the Euro zone, as Syriza's leader Alexis Tsipras is seeking to replace the bailout plan, which expires on February 28, with a new agreement that eases austerity and relieves Greece's debt burden. However, Tsipras has abandoned talk of leaving the Euro bloc and highlighted that his government wanted negotiation, not confrontation with international creditors.
Germany, the biggest creditor to the rest of the Euro zone, said that it is not prepared to renegotiate the bailout terms, raising the prospect that Greece could end up exiting the Euro zone. Germany also indicated that it is calm about a Syriza victory and that the Euro could cope with a "Grexit" without leading the whole currency to collapse.
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FOMC is due to make decision on rates on January 28
The most important event for all US dollar currency pair and, in particular, EUR/USD is going to be the decision of the Federal Open Market Committee that is making a decision on interest rates in the world's biggest economy. The Committee begins its meeting already on Tuesday. Despite all, analysts suggest that it is still unlikely that the regulator will raise rates this month, with the majority of them predicting tightening of the monetary policy not earlier than in June of this year. However, tomorrow the volatility of the Dollar is assumed to be uplifted.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 1.1113 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 are still possible, but their impact and size are not expected to be appropriate for the common currency to commence a stable recovery. 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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EUR/USD rebounded during trading on Monday of this week, while the pair returned back above the 1.12 level. All in all, daily gains reached as many as 100 pips, with no resistance levels crossed in course of this move. The closest supply zone is located at 1.1332 and is represented by the weekly pivot point, which may even stop bulls by acting alone. Therefore, short-term gains up to 1.1350 are possible, but the medium-term outlook remains negative for the Euro.
Hourly chart
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Read More: Technical Analysis
Opened positions on EUR/USD remain broadly neutral
At the same time, commands to acquire the Euro lost one more percentage point during last 24 hours to stay at just 31%. 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 PP at 1.1332.
On the other hand, if the euro declines, total losses may potentially extend down to the weekly S2 at 1.0766 in the foreseeable future.
Spreads (avg,pip) / Trading volume / Volatility
Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between Dec 27 and Jan 27 expect, on average, to see the currency pair just below 1.16 by the end of April. Though the majority of participants, namely 57% of them, believe the exchange rate will drop down even more below this mark in ninety days, with 39% alone seeing it below 1.12. Alongside, 23% 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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