- Commands to buy the euro versus the dollar are still staying on negative territory (38% bullish / 62% bearish)
- At the moment, the closest resistance for the pair is located at 1.1631
- In case of development to the south, the closest support is currently placed at 1.1466
- Upcoming events on January 21: US Building Permits (Dec) and Housing Starts (Dec)
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The Euro zone current account, a measure of the financial health of the currency bloc, narrowed on a seasonally adjusted in November, according to the European Central Bank. The current account surplus came in at 18.1 billion euros in the reported month, down from 19.5 billion euros in October. On a non-seasonally adjusted basis, however, the surplus narrowed to 24.6 billion euros, compared with a revised 29.7 billion a month earlier.
A long-awaited event in the Euro zone will take this week, as the ECB board members meet to discuss possible ways to revive the faltering Euro area's economy and combat deflation. This would be a crucial event, which will mark a new era in the ECB's history, as investors anticipate a launch of US-style broad-based government bond purchases. Analysts predict the expected scale of the programme that policymakers may come up with should range from 500 billion euros to 1 trillion euros.
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EUR/USD to be driven by US fundamentals on Wednesday
In course of January 21, the EUR/USD currency pair will be most likely influenced by strong movements from American side due to a large number of US fundamental news, both with low and high importance. The latter ones, in turn, include only building permits and housing starts for December and are only able to have some considerable impact on performance of this currency pair. Other euro crosses, however, are assumed to be little volatile amid lack of news from the Eurozone.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. All market attention in the upcoming two weeks will be paid to the ECB's meeting on January 22 and Greek parliamentary elections on January 25. The EUR/USD cross has recently managed to reach the lowest point of the year 2005 at 1.1639. Generally, 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 confidently below 1.15 towards the end of January, even though a short-term rebound back up to 1.17-1.18 is still possible. Moreover, analysts suggest that in case the Eurozone's QE takes place later this year the single currency may fall further and trade towards 1.10.Daily chart
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EUR/USD has finally added some value after major losses that took place during several consecutive days in a row. The single currency advanced around 50 pips to hit the 1.16 level at the end of trading. Despite that, from above a significant resistance area has been created both by the weekly PP and 2005 low, which are unlikely to let bulls succeed. Therefore, we expect the euro to step back and deteriorate towards monthly S3 at 1.1466 in the foreseeable future.
Hourly chart
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Read More: Technical Analysis
Opened positions declined below 50%
Meanwhile, pending orders to acquire the single currency versus the US dollar stayed completely unchanged from Monday, as longs are still having only 38% of them at the moment. 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 S1 at 1.1631.
On the other hand, if the Euro declines, total losses may potentially extend down to the weekly S1 at 1.1391 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 20 and Jan 20 expect, on average, to see the currency pair around 1.19 by the end of April. Though the majority of participants, namely 53% of them, believe the exchange rate will drop down even more below this mark in ninety days, with 18% alone seeing it below 1.12. Alongside, 24% of those surveyed reckon the price will trade in the range between 1.20 and 1.26 by the end of April of this year.
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