- Commands to buy the euro versus the dollar in 100-pip range from spot are still staying on negative territory (33% bullish / 67% 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 23: France Manufacturing and Services PMI (Jan), Germany Manufacturing and Services (PMI), Italy Trade Balance (Dec), Eurozone Manufacturing and Services PMI (Jan), US Manufacturing PMI (Jan) and Existing Home Sales (Dec)
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Today is a critical day, which may mark a change in the ECB's history, as the central bank is widely expected to embark on broad-based quantitative easing in order to shield the region's economy from deflation and revive the sluggish growth. Analysts expect a programme of sovereign-bond purchases to account for around 500 billion euros, others see the volume of 600-700 billion euro.
It is also predicted that purchases of sovereign debt will not be conducted under usual risk-sharing arrangements, whereby 19 national central banks share any losses in rough proportion to their economies' size, making the Bundesbank to shoulder a quarter of any losses incurred by the ECB. In this instance, each central bank is likely to be responsible for buying bonds of its own country and will have to bear any losses on them on its own.
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Germany and France PMI data to be announced tomorrow
Concerning the most important fundamental news that is going to be released on Friday, attention will mostly be paid to Germany and France, two biggest economies of the Eurozone. Both countries will publish indicators on activity in manufacturing and services industries in January of this year. Analysts predict markets to react to this data, even though they are still likely to have a volatile post-reaction from any possible ECB's decision on Thursday.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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Since previous Friday, the EUR/USD pair has been hovering inside the narrow 50-pip range between two levels, namely 1.1550 and 1.16. Yesterday, even despite the euro's attempt to surge above the 2005 low/weekly PP, the common currency returned back to close just above the major level of 1.16. Therefore, it seems that the resistance is and will remain too strong for bulls to cross it in the foreseeable future, giving the pair a potential to slide down.
Hourly chart
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Long opened positions stay unchanged at 49%
Meanwhile, pending orders to acquire the common currency versus the Buck dropped six percentage points from Wednesday to be just at 33% 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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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 22 and Jan 22 expect, on average, to see the currency pair just below 1.18 by the end of April. Though the majority of participants, namely 55% of them, believe the exchange rate will drop down even more below this level in ninety days, with 26% alone seeing it below 1.12. Alongside, 34% 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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