- Commands to buy the Euro versus the US Dollar in 100-pip range from the spot are bullish (60% long / 40% short)
- The closest resistance for this pair is located at 1.1162
- At the same time, the closest support is currently placed at 1.1012
- Upcoming events on May 21: France, Germany and Euro zone Manufacturing/Services PMI (May), ECB Monetary Policy Meeting Accounts, ECB President Draghi Speech, US Unemployment Claims (May 15) and Philadelphia Fed Manufacturing Survey (May)
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German investors' morale declined considerably more than expected in May, falling for the second consecutive month. According to the ZEW Center for European Economic Research, the economic sentiment index, measuring the outlook of around 350 German analysts and investors for the upcoming six months, plunged to 41.9, down from 53.3 in the previous month, and marking the lowest level in five months. Analysts, however, had expected the gauge to slid to 49.0.
Moreover, the Current Situation Indicator came in at 65.7 in May, falling from April's 70.2 and compared with analysts' forecast of 68 points. Last week, the data revealed Germany's GDP in the first quarter of 2015 expanded 0.3%, following the 0.7% growth recorded in the final three months of 2014.
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French production sector to rebound in May
Activity in the manufacturing and services industries of France is expected to increase in May, even though the benchmark PMI Index may remain below the 50-point threshold. German readings, however, are predicted to cool down marginally, reflecting the Q1 GDP weakness. In the meantime, economists forecast the manufacturing index from the Federal Reserve Bank of Philadelphia to expand up to 8.3 points in May.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 observed an aggressive sell on Tuesday of this week, prompted by remarks from the ECB. Bears gained strength around the 23.6% Fibonacci retracement (1.1294), and subsequently pushed the Euro down by 165 points against the Greenback. The pair is already trading below the 100-day SMA. As a result, bears are now focusing attention on the next support at 1.1003 (monthly PP). A close below this level should negate the possibility of rebound.
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. The commands to buy the Euro against the US Dollar in 100-pip range from the current market price decreased to Monday's level of 60% during the past 24 hours.
It proclaims that in case the EUR/USD rises in value, the pair's potential rebound is likely to be extended up to the weekly S1 at 1.1230. On the other hand, a downward development of the Euro should be capped by the monthly PP at 1.1003.
Spreads (avg,pip) / Trading volume / Volatility
Community is waiting for the Euro to stay unchanged this week
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Read More: Community Forecasts
rokasltu, one of the community members participating in the survey, motivates his bullish outlook towards the common currency by saying that EUR/USD is currently trading in the upper part of 1.10-1.15 range and he thinks that "the pair will try to break even further up but will face strong resistance." On the contrary, Ilolor suggests that "after the Euro strengthened against the Dollar on the back of under performing retail sales, the rally will probably slow down in the beginning of the coming week."
Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between Apr 20 and May 20 expect, on average, to see the currency pair around 1.11 by the end of August. Though the majority of participants, namely 51% of them, believe the exchange rate will trade below 1.12 in ninety days, with 36% 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 August of this year.
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