- Commands to buy the euro versus the dollar in 100-pip range from spot are staying strongly negative (34% bullish / 66% bearish)
- At the moment, the closest resistance for the pair is located at 1.1439
- In case of development to the south, the closest support is currently placed at 1.1268
- Upcoming events on February 4: Spain, Italy, France, Germany, Eurozone, US Services PMI (Jan), Italy GDP (Q4), Eurozone Retail Sales (Dec), US ADP Employment Change (Jan), FOMC Member Mester Speech
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Manufacturing activity in the Euro zone rose moderately in January, but remained close to stagnation amid mixed factory data from the bloc's leading economies, including Germany and France. The final manufacturing PMI for the Euro bloc came in at 51.0 in the reported month, up from 50.6 in December. Markit highlighted that European manufacturing are facing a duel problem of weak exports and domestic demand.
Business activity in the manufacturing sector of France, Italy, Austria and Greece declined, while activity rose at a slower pace in Germany. Thus, Spain and the Netherlands accounted for a major part of the overall pick-up. In Germany, the Euro area's growth engine, the manufacturing sector remained in the expansion territory with a reading of 50.9 while in the Euro zone's second biggest economy, France, the sector remained in contraction with the final manufacturing PMI picking up to 49.2 points.
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Services PMI data to be published in several EU countries tomorrow
It seems that the most awaited data that is getting ready to be announced on Wednesday of this week is the activity in services sectors of major European economies, as well as in the US. Tertiary industry is accounting for 65-70% of GDP in the majority of developed nations; therefore, this PMI data is an important indicator of overall economic health. Along with US, in the EU this statistics will be released in France, Germany, Spain and Italy.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. The ECB has made a long-awaited decision to expand asset purchases back on Jan 22, which will continue pushing the Euro to the downside. Moreover, the lowest point since the year 2003 around 1.1113 has already been hit by EUR/USD cross. Taking into account present monetary conditions and bearish outlook for the Euro, the pair has a chance to go below 1.10 towards the end of the first quarter of this year. Short-term bullish actions are still possible, but their impact and size are not expected to be appropriate for the common currency to commence a stable recovery. Moreover, some market participants suggest it may fall further and even trade towards the parity in course of this year.Daily chart
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It seems that currently the EUR/USD cross lacks impetus in order to develop in either direction. Despite support that is at the moment being provided by the weekly pivot point at 1.1268, the Euro rose on Monday just 30 pips to reach 1.1340 mark, but in the morning of Tuesday it resumed a slight decline down to 1.1328. Taking into account bearish technical studies on a daily chart, it is likely that today the pair will attempt to go below the mentioned demand.
Hourly chart
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Pending orders on EUR/USD rebound to reach 34%
At the same time, SWFX commands to acquire the Euro in 100-pip range rebounded slightly from yesterday's 83-day minimum to reach 34% on Tuesday. It means that, in case the pair increases in price, in the medium-term bearish pressure may stop the pair from climbing further around the weekly R1 at 1.1439.
On the other hand, if the Euro declines, total losses may potentially extend down to the weekly S1 at 1.1114 in the foreseeable future.
Spreads (avg,pip) / Trading volume / Volatility
Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between Jan 3 and Feb 3 expect, on average, to see the currency pair around 1.14 by the end of May. Though the majority of participants, namely 60% of them, believe the exchange rate will drop down even more below this mark in ninety days, with 33% alone seeing it below 1.10. Alongside, 19% of those surveyed reckon the price will trade in the range between 1.14 and 1.20 by the end of May of this year.
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