- Commands to buy the Euro versus the US Dollar in 100-pip range are negative (33% bullish / 67% bearish)
- The closest resistance for this pair is located at 1.0878
- At the same time, the closest support is currently placed at 1.0773
- Upcoming events on March 24: France, Germany, Euro zone and US Manufacturing PMI (Mar), US CPI (Feb) and New Home Sales (Feb)
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Producer prices in Germany, the largest economy in the single currency area, continued show some weakness during the month of February. The producer price index, which shows a change in price of goods sold by manufacturers, rose by 0.1% last month on a monthly basis, lower than a 0.2% advance estimated by analysts. Still, it was the first increase of the indicator in three months, which follows the negative development of 0.6% and 0.7% in January and December, respectively.
In the meantime, Euro zone's current account balance improved considerably in January, showing its second-highest reading ever. A 0.5% growth in exports due to weaker Euro and falling costs of imports by 5.7% resulted in a surplus of 29.4 billion euros for the first month of 2015.
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PMI and inflation data to be watched on Tuesday
Tomorrow, several countries in the Euro zone and the US are preparing to release important PMI indicators for production sectors of these countries. In Germany and France, improvement is expected to be showed by the activity index released by Markit. At the same time, US Manufacturing PMI has probably weakened from 55.1 points in February down to 54.7 this month. Besides this data, US annual inflation is estimated to remain unchanged at -0.1% for the month of February.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
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EUR/USD pair decided to jump considerably again on Friday, by gaining just below 200 pips during the trading session. While returning above important level of 1.08, the single currency is currently trading at its highest levels since March 9. Moreover, despite general bearish sentiment on the Euro and pessimistic daily technical indicators, the pair is unlikely to depreciate with ease in the near term, taking into account a strong support zone at 1.0750 (weekly PP; 2003 low; monthly S3).
Hourly chart
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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 returned back to negative numbers and account for 33% in the morning on Monday. It proclaims that in case the EUR/USD rises in value, the pair's potential rebound can be limited by the monthly S2 at 1.0942. On the other hand, a potential downward development of the Euro is considered to be extended down to the monthly S3 at 1.0709.
Spreads (avg,pip) / Trading volume / Volatility
Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between Feb 23 and Mar 23 expect, on average, to see the currency pair around 1.09 by the end of June. Though the majority of participants, namely 48% of them, believe the exchange rate will even drop below 1.08 in ninety days, with 33% alone seeing it below 1.04. Alongside, 31% of those surveyed reckon the price will trade in the range between 1.08 and 1.14 by the end of June of this year.
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