- Commands to buy the Euro versus the US Dollar in 100-pip range from the spot are bearish (40% long / 60% short)
- The closest resistance for this pair is located at 1.0934
- At the same time, the closest support is currently placed at 1.0856
- Upcoming events on May 29: Germany Retail Sales (Apr), Italy GDP (Q1), Euro zone Money Supply (Apr), US Prelim GDP (Q1)
© Dukascopy Bank SA
Consumers' morale in Germany reached the highest level since 2001, as optimistic economic outlook and low inflation persuaded consumers to open their wallets. The GfK consumer sentiment gauge rose to 10.2 in May, up from 10.1 in the preceding month. Also, consumers' economic expectations rebounded in May, rising 3 points to 38.3 points, GfK said.
Meanwhile, consumer confidence in the Euro zone's second biggest economy, France, dropped slightly in the current month, according to INSEE. The gauge eased to 93 in May, down from 94 a month earlier, snapping a steady period of increases started last October. Consumers' assessment of their recent financial situation also deteriorated slightly. The monthly report also indicated that fears of unemployment declined.
Watch More: Dukascopy TV
US GDP to be revised considerably downwards
On Friday, the US Prelim GDP data is due at 12:30 PM GMT. Following worse than expected fundamentals in March, the economy is now expected to decline by 0.8-0.9% in the first quarter of 2015, even though initial estimates put the GDP growth at 0.2%.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
© Dukascopy Bank SA
Yesterday, the common currency stopped losing value and settled just above the weekly S1 at 1.0856. This level continues to support EUR/USD on Thursday as well. However, this development seems to be temporary, and there is a risk of even steeper drop in the medium-term. In case the pair consolidates below 1.0850, it is likely to be pushed as low as 1.0740 (monthly S1) in a short period of time. Meanwhile, daily and weekly technical indicators are mixed on the perspectives of this currency pair at the moment.
Hourly chart
© Dukascopy Bank SA
Read More: Technical Analysis
EUR/USD sentiment are pending orders are bearish
Meanwhile, the commands to buy the Euro against the US Dollar in 100-pip range from the current market price returned to the level seen two days ago, namely 40% 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 limited by the monthly pivot point at 1.1003. On the other hand, a downward development of the Euro can be extended down to monthly S1 at 1.0740.
Spreads (avg,pip) / Trading volume / Volatility
Community is waiting for the Euro to drop considerably against the US Dollar this week
© Dukascopy Bank SA
Read More: Community Forecasts
geula4x, one of the community members participating in the survey, motivates his bearish outlook towards the single currency by saying that "EUR/USD seems very bearish on the daily chart. Price has dropped sharply from 1.1466 recent highs. Resistance lies around 1.1200 round number. This area has capped price recently on May 21 and 22. Support lies around 1.1050 double-bottom area, which has held price at March 11-16 and April 13-14."
Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between Apr 28 and May 28 expect, on average, to see the currency pair around 1.12 by the end of August. Though the majority of participants, namely 52% of them, believe the exchange rate will trade below this level in ninety days, with 37% alone seeing it below 1.08. Alongside, 22% 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.
© Dukascopy Bank SA