- Pending orders in 100-pip range from the current market price are strongly negative (25% bullish / 75% bearish)
- In case the pair increases in price, the closest resistance for it is located at 1.1874
- The downward movement is possible as well, while for that purpose the closest support is placed at 1.1781
- Upcoming events on January 9: German and French Industrial Production, German and French Trade Balance, US Non-Farm Employment Change, Unemployment Rate and Average Hourly Earnings
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The Euro zone slipped into deflation, as consumer prices fell more than expected due to plummeting oil prices, according to the flash estimate by Eurostat. The data showed consumer prices fell on an annual basis in December for the first time since the financial crisis more than five years ago, building pressure on the European Central Bank to employ stimulus programme as early as this month. Preliminary CPI dropped 0.2% in December, compared with the 0.3% rise recorded in the preceding month. December was the 22nd straight month, in which the inflation rate remained below the ECB's goal of just under 2.0%.
A separate report showed the unemployment rate in the currency bloc remained unchanged at 11.5% in November, but stayed below the 12% threshold for ten consecutive months. In the meantime, in Germany, the European powerhouse, employment rose by 27,000 people, while jobless rate fell to 6.5%.
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US unemployment likely to show further improvement
Most attention on the last day of this working week will be paid to the United States, where some important labor market data is going to be announced. It will include the non-farm employment change, which is expected to remain strong on a positive side, even though the growth pace may calm slightly down from last month's surge of 321,000. Alongside, jobless rate in the US is projected to decrease to 5.7%. From European side, both Germany and France are publishing data on industrial production and trade balance for November.Read More: Fundamental Analysis
EUR/USD sets 2005 low as new long-term goal
The long-term outlook for the EUR/USD currency pair is remaining bearish both in short and long-term. Additionally, the cross has recently managed to reach the lowest point of the previous year at 1.2096, just before it ended on December 31. Moreover, in January the pair continued declining well-below the 1.20 major level. Taking into account the present situation and bearish outlook for the Euro, the pair is likely to drop down to 2005 low at 1.1639 in the medium-term, even though a short-term rebound up to 1.21 is not excluded. Moreover, analysts suggest that in case of Eurozone's QE later this year the single currency may fall further and trade towards 1.10.Daily chart
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EUR/USD has been declining constantly since December 25 by losing as many as 400 pips from that time. On Wednesday a drop continued, while the Euro surpassed a support around 1.1870 (2010 low; weekly S2). Even though technical indicators are still giving mixed signals on all time-frames, a further downward movement is very likely. Till the end of the week the pair will most probably reach the point of testing next support at 1.1781, namely the monthly S2.
Hourly chart
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Opened positions stay bullish, long pending orders deteriorate to 25%
Additionally, long pending orders in 100-pip range from the spot price plummeted even below the Tuesday's low of 29% to reach 25% this morning. Therefore, pending orders are at their largest bearish level in more than two months. It implies that, in case the pair increases in price, in the medium-term bearish pressure may stop the pair from climbing further around the monthly S1 at 1.1939.
On the other hand, if the Euro declines, the losses may potentially extend down to weekly S3 at 1.1707 in the foreseeable future.
Spreads (avg,pip) / Trading volume / Volatility
Community expects Euro to fall further against US dollar
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Read More: Community Forecasts
Jignesh, one of the community members participating in the survey, motivates his bearish outlook towards the common currency by saying that the EUR/USD currency pair has recently managed to break a number of important support lines, including a monthly trend-line and 1.20 major level. He also adds that the "we may see a bit of a pull back to start the week but selling pressure should be strong."
Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between Dec 8 and Jan 8 expect, on average, to see the currency pair around 1.22 by the end of April. Though the largest portion of participants, namely 35% of them, believe the exchange rate will drop down to the 1.22/1.18 region in ninety days. On top of that, the 25% of those surveyed reckon the price will fall below 1.18 by the end of the first quarter of the next year.
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