- Commands to buy the euro versus the dollar in 100-pip range from spot are still staying on negative territory (39% bullish / 61% bearish)
- In case the pair increases in price, the closest resistance for it is located at 1.1631
- The downward movement is possible as well, while for that purpose the closest support is placed at 1.1466
- Upcoming events on January 22: Spain Unemployment Rate (Q4), Italy Industrial Production (Nov) and Retail Sales (Nov), Eurozone Consumer Confidence (Jan), ECB Interest Rate Decision (Jan) and Press Conference, US Unemployment Claims (Nov 16)
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German investor confidence strengthened for the third consecutive month to reach the highest level in 11 months in January. The ZEW index, which measures investor sentiment for the next six months and based on a survey of 233 analysts and investors, jumped to 48.4 in the beginning of the year, up from 34.9 in December, recovering further form the lows registered in October.
Meanwhile, the Danish central bank unexpectedly cut its interest rates as it sought to temper investors' interest in the Danish Krone, as market participants are looking for other triple-A rated European countries to park their cash. National bank slashed its deposit rate to minus 0.2% from minus 0.05%, and the lending rate to 0.05% from 0.2%. The central bank's main policy goal is to ensure stability of the nation's currency versus the Euro, to support Danish exporters and maintain inflation low and stable.
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All eyes on ECB as it makes QE decision on Thursday
Almost all market attention on Thursday will be paid only to the European Central Bank. The regulator is going to make its scheduled decision on main interest rate which, however, is estimated to remain unchanged. The most important part is going to be Mario Draghi's press conference where the ECB President is forecasted to announce a major QE program in the Eurozone with a projected amount of 500 billion euros. In spite of any decision made, the market reaction on all euro crosses is likely to be rather strong tomorrow.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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For a fourth day in a row the EUR/USD pair is swinging between gains and losses, waiting for some impetus to come and push the cross in some direction. It is likely that the Euro is preparing for the ECB's decision-making day tomorrow. Currently the trading range is located between 1.1540 and 1.16, but the overall sentiment still tends to be negative for the euro. However, Wednesday is likely to remain little volatile before possible bearish development overtakes a lead on Thursday.
Hourly chart
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Read More: Technical Analysis
Long opened positions declined below 50%
Meanwhile, pending orders to acquire the single currency versus the US dollar added just one percentage point since Tuesday to reach 39% this morning. 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
Community still expects Euro to continue falling versus US dollar
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Read More: Community Forecasts
AdamFx42, one of the community members participating in the survey, motivates his bearish outlook towards the common currency by saying that the EUR/USD "has been hit hard by the Swiss announcement of taking away the cap. The already bearish pair failed to hold 1.1560 monthly support area." As a result, he assumes the pair will decline down to 1.15 towards the end of this week.
Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between Dec 21 and Jan 21 expect, on average, to see the currency pair around 1.1850 by the end of April. Though the majority of participants, namely 51% of them, believe the exchange rate will drop down even more below 1.18 in ninety days, with 23% alone seeing it below 1.12. Alongside, 35% of those surveyed reckon the price will trade in the range between 1.18 and 1.26 by the end of April of this year.
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