- Commands to buy the Euro versus the US Dollar in 100-pip range are negative (41% bullish / 59% bearish)
- The closest resistance for this pair is located at 1.0621
- At the same time, the closest support is currently placed at 1.0335
- Upcoming events on March 18: ECB Non-Monetary Policy Meeting, Italy Trade Balance (Jan), Federal Reserve Interest Rate Decision and Monetary Policy Statement
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A sustained economic recovery is finally taking hold in the currency bloc thanks to the central bank's stimulus as well as cheaper oil prices, European Central Bank President Mario Draghi said. Draghi's comments are supported by growing confidence among consumers and businesses and banks' increasing willingness to lend. Draghi also urged countries to make a "quantum leap" towards greater European integration, as well as pass tough structural reforms to create a more business-friendly environment.
In the meantime, Ignazio Visco, a member of the ECB Governing Council and Italy's central bank governor, said the Euro had dropped faster than expected since the ECB first announced its quantitative easing programme and there were risks the scheme could overshoot its goal, as well as trigger an excessive increase in the prices of financial and real estate assets.
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All eyes on Fed as it decides on interest rates
On Wednesday, the Federal Reserve is holding its scheduled monetary policy meeting, where policymakers will decide on future on interest rates in the world's most powerful economy. The Fed has been in a particular interest among analysts, as this regulator is currently the only major central bank that is considered to raise rates in the nearest future. Even though no changes are projected to take place tomorrow, the Fed may give some insight into possible terms of the long-awaited hike.Read More: Fundamental Analysis
EUR/USD set to weaken in the long-term
The long-term outlook for the EUR/USD currency pair remains bearish. On January 22, the ECB decided to expand its asset purchases by buying government bonds since March 9. The programme is likely to continue pushing the Euro downwards. Taking into account present divergence of monetary policies between the European Central Bank and the Federal Reserve, as well as the aggregate bearish outlook for the Euro, the pair will be able to reach the parity in the foreseeable future. Moreover, some market participants suggest it may fall further and even trade below the parity in course of next couple of months, especially when the Fed gives more insight on the federal funds rate's increase.Daily chart
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On Monday, the common currency has partly erased losses it accumulated during Friday. EUR/USD rose above the 1.0550 mark and even tried to penetrate the weekly pivot point at 1.0621. However, this level used to be strong enough to reverse the weakened European currency back to the south. Among major changes, daily technical studies are now giving strong signals to sell the Euro, with five out of eight indicators being bearish. Therefore, the pair is likely to resume losing value in the short-term, with a daily target at 1.0530.
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 gained five percentage points to 41% this morning. It proclaims that in case the EUR/USD rises in value, a pair's potential rebound can be limited by the weekly PP at 1.0621. On the other hand, a potential downward development of the Euro is considered to be extended down to the weekly S2 at 1.0177.
Spreads (avg,pip) / Trading volume / Volatility
Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between Feb 17 and Mar 17 expect, on average, to see the currency pair around 1.105 by the end of June. Though the majority of participants, namely 51% of them, believe the exchange rate will even drop below 1.10 in ninety days, with 30% alone seeing it below 1.06. Alongside, 27% of those surveyed reckon the price will trade in the range between 1.10 and 1.16 by the end of June of this year.
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