- 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 1.0942
- At the same time, the closest support is currently placed at 1.0896
- Upcoming events on March 26: Germany Gfk Consumer Confidence (Apr), France GDP (Q4), US Unemployment Claims (Mar 13) and Markit Services PMI (Mar)
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Manufacturing and service sectors' activity in the single currency area has improved confidently in March, underlying positive expectations from the quantitative easing programme of the ECB that is likely to lift up Euro zone's weakened economy. Therefore, markets suggest that a recovery in the 19-nation currency bloc is becoming more sustainable. The composite PMI Index for both manufacturing and service industries, released by Markit Economics, climbed to 54.1 points this month, up from 53.3 in February and more than forecasted at 53.6 points.
By country, the most considerable contribution was made by Germany, the region's biggest economy, where the composite indicator surged to 55.3 points, giving the activity a 23th straight month of expansion. In the meantime, French numbers came out worse than estimated for production sector, and in line with forecasts for services industry. Although they both increased to 48.2 and 52.8 points, respectively, manufacturing in the Fifth Republic still remains in the contraction phase.
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German consumer confidence seen rebounding as economy recovers
Tomorrow, Gfk is preparing to publish numbers that are evaluating consumer confidence in the Euro zone's largest economy. The index is expected to grow by ten basis points to reach 9.8 for the month of April. Besides that, France is going to revise its GDP growth for the last quarter of 2014; however, no changes are currently forecasted to take place.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 1.07 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 reach parity towards the end of June. Short-term bullish actions may take place, but their impact and size are still expected to be inappropriate for the common currency to commence a stable recovery in the medium-term. Moreover, some market participants suggest it may fall further and even trade below the parity in course of second half the year.Daily chart
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On Tuesday, EUR/USD has initially succeeded in crossing the major resistance line at 1.0942, represented by the monthly S2. It was the second attempt to overcome this important level and the pair has even surged above 1.10. However, bearish pressure returned to the market and the Euro dropped back below this level towards the end of trading day. Taking into account current trading range (just between monthly S2 and 20-day SMA) and mix of fundamental news, the pair is likely to trade sideways on March 25.
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 are accounting for 35% in the morning today, a loss of seven percentage points during past 24 hours. It proclaims that in case the EUR/USD rises in value, the pair's potential rebound can be limited by the monthly S2 at 1.0942. On the other hand, a potential downward development of the Euro is considered to be extended down to the monthly S3 at 1.0709.
Spreads (avg,pip) / Trading volume / Volatility
Community is waiting for the Euro to trade sideways this week
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Read More: Community Forecasts
independenceday32, one of the community members participating in the survey, motivates his bullish outlook towards the common currency by saying that after the pair returned back above the 1.05 mark "chances that the pair remains in range between 1.05 and 1.10 are high." On the other hand, aslamhammad is currently bearish on the pair. He says that "My sentiment is bearish for the EUR/USD. Taking into account that USD/CAD is currently trading near yearly highs, with low crude oil commodity prices. Therefore, I am expecting deflation in Europe."
Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between Feb 25 and Mar 25 expect, on average, to see the currency pair around 1.09 by the end of June. Though the majority of participants, namely 49% of them, believe the exchange rate will drop down even below 1.08 in ninety days, with 35% alone seeing it below 1.04. Alongside, 29% of those surveyed reckon the price will trade in the range between 1.08 and 1.14 by the end of June of this year.
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