- Commands to buy the Euro versus the US Dollar in 100-pip range from the spot are bearish (37% long / 63% short)
- The closest resistance for this pair is located at 1.1147
- At the same time, the closest support is currently placed at 1.1013
- No fundamental news are expected to be published on May 25
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Manufacturing activity in the currency bloc continued to rise in May, according to flash data from Markit. The flash manufacturing PMI for the Euro zone increased to 52.3 points in May, compared to 52.0 in April. The region's services sector also enjoyed a healthy expansion, with the flash services PMI reading booking 53.3. Also, the closely-watched composite PMI came in at 53.4, remaining firmly in green territory.
In Germany, the Euro zone's powerhouse, the manufacturing sector saw output continued to increase in May, albeit at a slower pace. May's preliminary PMI for Germany's manufacturing sector came in at 51.4, compared with April's final reading of 52.1, and below analysts' expectations of 52. Meanwhile, activity in the country's service sector deteriorated in the reported month, the flash data showed. The preliminary services PMI fell to 52.9 points, below April's 54.0 points and failing to meet expectations of 53.9.
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US, EU bank holidays to result in absence of fundamentals on Monday
On the first day of the next working week, the vast majority of European countries and the Unites States are going to have a Bank Holiday. Therefore, publication of all fundamental news will be postponed to the following days the same week.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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Despite EUR/USD's attempts to return back above the 100-day SMA at 1.1147, the key attention remains on the downside and the closest support level at 1.1013 (weekly S2). This demand is accompanied by the monthly pivot point at 1.1003, and only a closure below both of them will refocus the market on even lower levels. Monthly technical indicators still remain bearish, putting the long-term target on the 1.09 area (200-day SMA).
Hourly chart
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Read More: Technical Analysis
EUR/USD sentiment and pending orders are bearish
Meanwhile, the commands to buy the Euro against the US Dollar in 100-pip range from the current market price dropped by five additional percentage points during the past 24 hours to reach just 37%. 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 1.1147. 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 22 and May 22 expect, on average, to see the currency pair around 1.12 by the end of August. Though the majority of participants, namely 47% of them, believe the exchange rate will trade below this level in ninety days, with 31% alone seeing it below 1.08. Alongside, 31% 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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