- Commands to buy the euro versus the dollar in 100-pip range from spot are staying strongly negative (31% bullish / 69% bearish)
- In case the pair increases in price, the closest resistance for it is located at 1.1332
- The downward movement is possible as well, while for that purpose the closest support is placed at 1.1114
- Upcoming events on January 31 – February 2: Spain, Italy, France, Germany, Eurozone and US Manufacturing PMIs (Jan), Spain Unemployment Change (Jan), Eurozone Unemployment Rate (Jan), US Personal Spending (Dec)
© Dukascopy Bank SA
Deflation contagion spreads gradually around Europe, as consumer prices growth in Germany turned negative in January for the first time in more than five years. According to the Federal Statistics Office, inflation in the Euro zone's number one economy dropped 0.5% on year in January, the lowest level since September 2009. Measured on a monthly basis, German HICP, the reading that allows comparison between inflation figures in other European countries, declined 1.3% from December.
Meanwhile, German unemployment rate fell to the lowest level in more than two decades, the Labour Office reported. The jobless rate slid to 6.5% in January, boosting hopes that private consumption will help boost growth in the Europe's growth engine this year. The number of German unemployed dropped 9,000 in January following a 25,000 decline in December.
Watch More: Dukascopy TV
Manufacturing PMI data to drive Monday statistics
In the beginning of the next trading week on Monday, analysts are expecting to get a bunch of data on activity in manufacturing sectors of different countries, where they sometimes account for a considerable part of the economy. Among European countries, the most important numbers are awaited to come from Spain, Italy, Germany and France. They will be followed by the same data for the whole Eurozone and the Unites States, which may influence developments of the EUR/USD cross on that day.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
© Dukascopy Bank SA
On Thursday, the common currency rebounded slightly and partly erased losses that were gained back two days ago. EUR/USD cross has even tried to push itself above the weekly pivot point 1.1332 but all attempts turned to be unsuccessful. Therefore, the daily closing level was located at 1.1319, 13 pips below the mentioned resistance. It is likely that the Euro will make a second attempt to penetrate this level today, even despite bearish technical studies.
Hourly chart
© Dukascopy Bank SA
Read More: Technical Analysis
Opened positions on EUR/USD remain broadly neutral
At the same time, commands to acquire the Euro in 100-pip range returned back to the level seen on Tuesday of this week at 31%. As a result, it means that, in case the pair increases in price, in the medium-term bearish pressure may stop the pair from climbing further around the monthly S3 at 1.1466.
On the other hand, if the Euro declines, total losses may potentially extend down to the weekly S1 at 1.0984 in the foreseeable future.
Spreads (avg,pip) / Trading volume / Volatility
Community is waiting for the Euro to stabilise this week
© Dukascopy Bank SA
Read More: Community Forecasts
aslamhammad, one of the community members participating in the survey, motivates his slightly positive outlook towards the common currency by saying that the EUR/USD "selling pressure is decreasing as QE programme was largely expected". He also supposed that the 1.10 level offers a good support for the Euro and the pair "may struggle to break it this week".
Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between Dec 30 and Jan 30 expect, on average, to see the currency pair around 1.1450 by the end of April. Though the majority of participants, namely 56% of them, believe the exchange rate will drop down even below 1.14 in ninety days, with 29% alone seeing it below 1.10. 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.
© Dukascopy Bank SA