- Commands to buy the Euro versus the US Dollar in 100-pip range are negative (35% bullish / 65% bearish)
- The closest resistance for this pair is located at 1.1368
- At the same time, the closest support is currently placed at 1.1297
- Upcoming events on February 25: Italy Trade Balance (Jan), ECB President Mario Draghi's Speech in Brussels, Federal Reserve Chair Janet Yellen's Speech in US Congress (Day 2), US New Home Sales (Jan)
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German business confidence strengthened for a fourth consecutive month in February, climbing to the highest level in seven months, fanning concerns over a waning resilience of the Euro zone's biggest economy. The German research institute, Ifo reported that the Business Climate Index ticked up to 106.8 in the reported month, compared with the January's reading of 106.7. Economists, however, had predicted 107.7.
Meanwhile, an agreement between Athens and its European colleagues significantly lowered the chances that Greece would leave the currency bloc. The Greek government is now expected to submit to its EU and IMF creditors a package of reforms that must be approved before Euro zone members ratify a bailout extension on Tuesday.
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Mario Draghi to speak in Brussels, Janet Yellen to testify in Congress for second day
On Wednesday of the current week, ECB President Mario Draghi will testify on the ECB Annual Report 2013 in Brussels before the European Parliament. In the meantime, the same job will be done by the Federal Reserve Chairwoman Janet Yellen as tomorrow she will speak before the US Congress's House Financial Services Committee. Both heads of world's two major central banks are usually expected to give some guidance on future of monetary policy decisions; therefore, volatility of EUR/USD is likely to be uplifted tomorrow.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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Despite being initially supported by the weekly pivot point at 1.1368, the EUR/USD pair pierced through this important support and plunged considerably on Monday. The pair lost around 50 pips on a daily basis and closed just below the 1.1340 mark. Meanwhile, the 20-day SMA is currently approaching weekly PP; therefore, a comeback of the Euro is unlikely in the nearest future, while chances of a further drop at least down to 1.1287 (weekly S1) increased significantly.
Hourly chart
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Read More: Technical Analysis
EUR/USD sentiment remains below 50%
Additionally, SWFX pending orders to buy the Euro against the US Dollar in 100-pip range from the spot are in the minority and account for just 35% of all. It proclaims that in case the EUR/USD rises in value, the pair's medium-term gains are likely to be capped by the 20-day SMA at 1.1402. On the other hand, a potential downward development of the Euro is considered to be extended down to the weekly S2 at 1.1197.
Spreads (avg,pip) / Trading volume / Volatility
Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between Jan 24 and Feb 24 expect, on average, to see the currency pair around 1.13 by the end of May. Though the majority of participants, namely 54% of them, believe the exchange rate will drop down even more below 1.12 in ninety days, with 28% alone seeing it below 1.08. Alongside, 22% of those surveyed reckon the price will trade in the range between 1.12 and 1.18 by the end of May of this year.
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