- Commands to buy the Euro versus the US Dollar in 100-pip range from the spot are bearish (42% long / 58% short)
- The closest resistance for this pair is located at 1.1154
- At the same time, the closest support is currently placed at 1.1013
- Upcoming events on May 22: Germany Final GDP (Q1) and IFO Business Climate (May), US CPI (Apr), ECB President Draghi Speech, Fed Chair Yellen Speech
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France, the Euro zone's second largest economy, is recovering but its growth potential is still much weaker than before the crisis, the International Monetary Policy said. According to the think-tank, France's main hurdles lie in record levels of public spending and public debt, as well as stubbornly high jobless rate. The unemployment rate was at 10.6% in March. Without further structural reforms, the jobless rate in France was "likely to decline only very slowly." The IMF predicts that the French economy will grow 1.2% this year, above the government's estimates, after almost four years of near-stagnation.
Meanwhile, Greece's government parliamentary speaker Nikos Filis said that the country will not be able to make repayment to the International Monetary Fund due on June 5 without an agreement with its international creditors. Athens faces several payments worth around 1.5 billion euros to the IMF next month and is in negotiations with the European Union and the IMF to strike a cash-for-reforms deal before it runs out of money.
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German IFO business sentiment to follow negative trend of ZEW
On Friday, the IFO Institute will release the business confidence index for the Euro zone's largest economy, which is expected to decrease moderately in May, down from 108.6 points to 108.3. In case these estimates are correct, the IFO Index will follow a downward tendency showed by the ZEW Economic Sentiment back on Tuesday of this week. Meanwhile, the European flagman will review its economic growth in the first quarter, but no changes are forecasted at the moment and the quarterly growth is likely to be confirmed at 0.3%.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 declined for a third consecutive day on Wednesday, even though losses were limited after FOMC minutes. At first, the US Dollar appreciated to reach the May 5 high at 1.1060, but pared gains later during the trading and the cross closed just below 1.11. At the same time, bears are now targeting the monthly PP at 1.10, a close below which will negate the short-term bullish outlook and refocus attention to the downside.
Hourly chart
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Read More: Technical Analysis
EUR/USD sentiment stays bearish, pending orders drop below 50%
Meanwhile, the commands to buy the Euro against the US Dollar in 100-pip range from the current market price plunged below 50% for the first time in seven trading days to hit the 42% mark in the morning on Thursday. It proclaims that in case the EUR/USD rises in value, the pair's potential rebound is likely to be capped by the 100-day SMA at 1.1154. On the other hand, a downward development of the Euro should be extended down to 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 21 and May 21 expect, on average, to see the currency pair around 1.12 by the end of August. Though the majority of participants, namely 49% of them, believe the exchange rate will trade below this level in ninety days, with 34% alone seeing it below 1.08. Alongside, 30% 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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