- Commands to buy the Euro versus the US Dollar in 100-pip range from spot dropped considerably and are now strongly negative (24% bullish / 76% bearish)
- At the moment, the closest resistance for the pair is located at 1.1379
- In case of development to the south, the closest support is currently placed at 1.1225
- Upcoming events on February 12: Germany CPI (Jan), Eurozone Industrial Production (Jan), US Unemployment Claims (Feb 6) and Retail Sales (Jan)
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While couple of hours remain till the emergency gathering of the Euro zone finance ministers and the Greek officials, the odds of Greece's exit from the Euro zone are increasing. The repercussions of a Eurozone break-up could be catastrophic for both the European and world economies. Thus, finance chiefs started talks at the G20 in Turkey to try to strike a deal between Greece and its main creditors.
Some experts believe that the Euro zone is not only strong enough to withstand Grexit, but would also benefit from it. Others are not so optimistic, as they see the European Central Bank would be left holding billion of euros of Greek debt, while investors would liquidate their European assets, creating a cash-flow problem and triggering deflationary spiral.
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German CPI, Eurozone manufacturing data to be released on Thursday
For the first time in three working days Europe will deliver important fundamental indicators that may eventually start driving the common currency in either direction on Thursday. Among them, Eurostat will publish numbers on currency bloc's industrial production in January. Along with that, Germany's inflation is expected to slow down even more, with the consumer price index projected to fall to -1% for the first month of this year.Read More: Fundamental Analysis
EUR/USD set to weaken in the long-term
The long-term outlook for the EUR/USD currency pair is remaining bearish. On January 22, the ECB has made a long-awaited decision to expand its asset purchases 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 may take place, but their impact and size are not expected to be appropriate for the common currency to commence a stable recovery in the long-run. 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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EUR/USD registered completely no changes in its value on Tuesday as compared to Monday's closing level. The pair traded around 1.1320 for the most part of the day, even though the overall trading range was located between 1.1270 and 1.1350. Still, daily technical indicators continue pointing to the south, meaning that the bearish scenario is more likely than the bullish one. Therefore, when the US Dollar gets enough impetus, it may push the pair down to 1.1225 in the near term (weekly S1).
Hourly chart
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Pending orders on EUR/USD stay on strong bearish territory
At the same time, SWFX commands to acquire the Euro in 100-pip range from the current market price dropped by additional 13% during past 24 hours to account for just 24% this morning. It proclaims that in case of the pair's increases in price, its' medium-term gains are likely to be limited by the 23.6% Fibonacci retracement at 1.1519.
On the other hand, if the Euro declines, total losses have a chance to be extended down to the weekly S3 at 1.0983 in the medium-term.
Spreads (avg,pip) / Trading volume / Volatility
Community is waiting for the Euro to decline by February 14
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massimoscalas, one of the community members participating in the survey, motivates his bearish outlook towards the common currency by saying that "if the price breaks 1.13 back to 1.1209 and from there to a minimum of the year, at this point the Euro will be under pressure and a new break could send him to the next support." He also supposed that there are several external risks presently: "There are two geopolitical reasons: Greece and Ukraine. There's a macroeconomic reason as well: US yields rise.".
Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between Jan 11 and Feb 11 expect, on average, to see the currency pair around 1.13 by the end of May. Though the majority of participants, namely 56% of them, believe the exchange rate will drop down even below 1.12 in ninety days, with 26% alone seeing it below 1.08. Alongside, 16% 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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