- Commands to buy the Euro versus the US Dollar in 100-pip range from the spot are bullish (61% long / 39% short)
- The closest resistance for this pair is located at 1.1348
- At the same time, the closest support is currently placed at 1.1294
- Upcoming events on May 20: Germany PPI (Apr), ECB Non-Monetary Policy Meeting, FOMC Meeting Minutes
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The Euro zone's number one economy Germany is expected to grow, supported mainly by domestic consumption, according to Bundesbank. Last week Germany's statistics office reported that Europe's largest economy expanded by only 0.3% in quarterly terms in the first quarter, disappointing economists' expectations for stronger growth. The central bank predicts a sluggish growth of the German industry.
Meanwhile, Italy's trade surplus fell in March as import growth outpaced increase in exports. The trade surplus shrank to a seasonally adjusted 3.89 billion euros, compared with 4.46 billion euros in February. Exports rose 1.8% from February, when it increased 2.6%. Meanwhile, growth in imports surged to 4%, up from 0.8%.
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FOMC minutes to be in focus on Wednesday
On May 20, the Federal Open Market Committee will publish the minutes from its last meeting that took place three weeks ago. They are usually expected to show some insight concerning the potential rate hike in the US this year or later. This data is likely to have influence on the performance of the US Dollar's currency crosses.Read More: Fundamental Analysis
EUR/USD likely to lose value, trading range to narrow down
Judging from EUR/USD's developments that took place since May of the previous year, the pair is clearly trading downwards on a long-term chart. At the same time, it seems that now the pair is being bounded between the 2014 low and long-term downtrend line, meaning that it is currently hovering inside the descending triangle pattern. Moreover, this pattern implies a narrowing trading range, while the break-out point can be reached by the end of August. In the medium-term the common European currency may surge up to the 1.1450 mark where long-term downtrend is able to push the cross back in the direction of 1.05-1.10 area. However, the pair can also assume a possibility of growing as high as 200-day SMA around five figures above the downtrend, before finally making a decision to commence a bearish correction.Daily chart
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EUR/USD bounced significantly to the downside on the first day of this working week. Bearish impetus was, as expected, provided by the long-term downtrend line around 1.1450, which sent the pair as low as 1.1315 by the end of the trading session. In case the Euro falls below 1.1294 (23.6% Fibo) on Tuesday, the losses can be potentially extended down to 100-day SMA (1.1180) in the near-term, while a possible rebound is unlikely to push the pair beyond weekly PP at 1.1348.
Hourly chart
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Read More: Technical Analysis
EUR/USD sentiment stays bearish, while pending orders remain upbeat
Meanwhile, pending orders on this currency pair are strongly positive. From yesterday, the commands to buy the Euro against the US Dollar in 100-pip range from the spot added one percentage point to 61%.
It proclaims that in case the EUR/USD rises in value, the pair's potential rebound is likely to be extended up to 1.1450. On the other hand, a downward development of the Euro should be capped by the weekly S1 at 1.1230.
Spreads (avg,pip) / Trading volume / Volatility
Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between Apr 19 and May 19 expect, on average, to see the currency pair around 1.11 by the end of August. Though the majority of participants, namely 45% of them, believe the exchange rate will be even below the 1.10 level in ninety days, with 31% 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 August of this year.
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