- Commands to buy the Euro versus the US Dollar in 100-pip range are negative (42% bullish / 58% bearish)
- The closest resistance for this pair is located at 1.0708
- At the same time, the closest support is currently placed at 1.0573
- Upcoming events on March 13: Italy CPI (Feb), US Producer Price Index (Feb) and Reuters/Michigan Consumer Sentiment Index (Mar)
© Dukascopy Bank SA
German inflation returned to positive territory in February, after consumer prices in Europe's number one economy slid to deflation in January. Annual inflation rose 0.1%, following the 0.4% decline seen in January, according to the Federal Statistics Office. Back in January, the indicator slid to red territory for the first time in over five years, recording the lowest level since July 2009, when the gauge dropped up 0.5%.
Meanwhile, cost of living in France remained in negative zone in February, as inflation in the Euro zone's second biggest economy came in at –0.3% on a yearly basis, but slightly better than –0.4% a month earlier. On a monthly basis, consumer prices rose 0.7% in the measured month, following the 1.0% decline in January.
Watch More: Dukascopy TV
US manufacturing production data to be released on Monday
The next Monday is not going to be an exception in terms of lack of fundamental statistics that could potentially drive the foreign exchange market from the perspective of the Euro. Judging from American side, they are preparing to announce the industrial production data for February of this year. However, it seems not to be enough in order to cause any major movements of USD-crosses.Read More: Fundamental Analysis
EUR/USD set to weaken in the long-term
The long-term outlook for the EUR/USD currency pair remains bearish. On January 22, the ECB decided to expand its asset purchases by buying government bonds since March 9. The programme is likely to continue pushing the Euro downwards. Taking into account present divergence of monetary policies between the European Central Bank and the Federal Reserve, as well as the aggregate bearish outlook for the Euro, the pair will be able to reach the parity in the foreseeable future. Moreover, some market participants suggest it may fall further and even trade below the parity in course of next couple of months, especially when the Fed gives more insight on the federal funds rate's increase.Daily chart
© Dukascopy Bank SA
On Thursday, the common currency rebounded versus the American Dollar as the pair returned back above 1.06 round level. However, an increase still seems to be temporary and follows a strong drop that took place during Tuesday and Wednesday. This assumption was proved by EUR/USD's failure to surpass the closest resistance at 1.0710 (monthly S3; weekly S1). Therefore, current expectation is for a renewal of the downward tendency, with the medium-term target at 1.0420 (lower Bollinger band).
Hourly chart
© Dukascopy Bank SA
Read More: Technical Analysis
EUR/USD sentiment and pending orders are negative
Additionally, pending orders to buy the Euro against the US Dollar in 100-pip range from the spot have improved even more from yesterday to rise up to 42% (+18%) this morning. However, it still proclaims that in case the EUR/USD rises in value, a pair's potential rebound can be limited by monthly S3 at 1.0709. On the other hand, a potential downward development of the Euro is considered to be extended down to the weekly S3 at 1.0307.
Spreads (avg,pip) / Trading volume / Volatility
Community is waiting for the Euro to rebound this week
© Dukascopy Bank SA
Read More: Community Forecasts
Likerty, one of the community members participating in the survey, motivates his bullish outlook towards the common currency by saying that "the Euro will make another leg lower to 1.0760 level, and I suppose would not continue its to depreciate below that." I " He also expects "a strong bounce/correction before the next week's FOMC."
Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between Feb 13 and Mar 13 expect, on average, to see the currency pair around 1.12 by the end of June. Though the majority of participants, namely 55% of them, believe the exchange rate will drop down even below this mark in ninety days, with 26% alone seeing it below 1.08. Alongside, 29% of those surveyed reckon the price will trade in the range between 1.12 and 1.18 by the end of June of this year.
© Dukascopy Bank SA