- Commands to buy the Euro versus the US Dollar in 100-pip range are strongly negative (24% bullish / 76% bearish)
- The closest resistance for this pair is located at 1.0573
- At the same time, the closest support is currently placed at 1.0478
- Upcoming events on March 13: Italy CPI (Feb), US Producer Price Index (Feb) and Reuters/Michigan Consumer Sentiment Index (Mar)
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Mario Draghi, the European Central Bank President, defended the decision to deploy a massive stimulus plan, based on large-scale purchases of government bonds. Draghi highlighted that such policies are typical for central banks around the globe. However, ECB President also said that the extra liquidity provided by the central bank may pose some risks, but he stressed that those risks were contained.
The ECB's Governing Council approved QE on January 22 despite opposition from Bundesbank President Jens Weidmann, who continued to criticize the ECB's intention. The central bank started a policy of printing money to buy sovereign bonds on Monday, in an attempt to support fragile Euro zone's economy and lifting inflation in the currency bloc from below zero levels up towards its goal of just under 2%.
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Friday to be silent in terms of fundamental data
On Friday, the University of Michigan is going to release its consumer sentiment indicator for the United States for the month of March. However, markets expect only a slight increase and the overall index will remain on a high level of more than 95 points. Besides that, fundamental factors that may potentially influence the EUR/USD currency pair are estimated to remain silent both the Euro zone and United States.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 by buying government bonds since March 9. The programme is likely to continue pushing the Euro downwards. Moreover, the lowest point in more than 12 years below 1.05 has already been hit by EUR/USD cross. Taking into account present monetary conditions and bearish outlook for the Euro, the pair has an ability to reach the parity in the near term. Moreover, some market participants suggest it may fall further and even trade below the parity in course of next couple of months.Daily chart
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Despite being initially capped by strong demand area around 1.0710 (monthly S3; weekly S1), EUR/USD's bears eventually managed to push the pair even more to the downside. The pair dropped more than 100 pips for a third time in four days as the single currency plummeted below the weekly S2 and approached the major level of 1.05. On Thursday, the cross is estimated to probe strength of this very important psychological level, and a potential plunge below it will open the way towards the next support as low as 1.0307 (weekly S3).
Hourly chart
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Read More: Technical Analysis
EUR/USD sentiment and pending orders are negative
Additionally, pending orders to buy the Euro against the US Dollar in 100-pip range from the spot have improved marginally from Wednesday to have 24% this morning. It proclaims that in case the EUR/USD rises in value, a pair's potential rebound can be limited by weekly S2 at 1.0573. On the other hand, a potential downward development of the Euro is considered to be extended down to the weekly S3 at 1.0307.
Spreads (avg,pip) / Trading volume / Volatility
Community is waiting for the Euro to rebound this week
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Read More: Community Forecasts
Likerty, one of the community members participating in the survey, motivates his bullish outlook towards the common currency by saying that "the Euro will make another leg lower to 1.0760 level, and I suppose would not continue its to depreciate below that." I " He also expects "a strong bounce/correction before the next week's FOMC."
Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between Feb 12 and Mar 12 expect, on average, to see the currency pair around 1.12 by the end of June. Though the majority of participants, namely 56% of them, believe the exchange rate will drop down even below this mark in ninety days, with 26% alone seeing it below 1.08. Alongside, 29% of those surveyed reckon the price will trade in the range between 1.12 and 1.18 by the end of June of this year.
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