- 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 1.1050
- At the same time, the closest support is currently placed at 1.0951
- Upcoming events on June 2: Germany Unemployment Rate/Unemployment Change (May), Spain Unemployment Change (May), Euro zone CPI (May), US Factory Orders (Apr)
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German retail sales increased faster than expected in April, adding to signs private consumption is likely to remain a solid catalyst to economic growth in Europe's number one economy. Retail sales in April rose 1.7% in real adjusted terms compared with March, statistics office Destatis said, yet the indicator is notorious for being highly volatile and prone to large revisions. On an annual basis, retail sales expanded 1.0% in real terms in April, Destatis said.
Meanwhile, the Euro zone's third biggest economy consumer inflation slightly decelerated its pace of growth on a monthly basis in May but still managed to stay in positive territory, Istat reported. The CPI for May decelerated to 0.2% month-on-month, after a slightly improved reading seen in April, when the gauge rose 0.3%. Market analysts had expected a 0.1% increase in consumer prices.
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German, Spanish labour market remained strong in May
According to the average analysts' expectations, labour markets in Germany and Spain, the first and fourth biggest economies of the single currency bloc, have probably showed continuous strength last month. The total number of people unemployed in Spain is projected to drop by 115,000 in May, while in Germany a decrease is expected to reach 10,000. Additionally, the Eurostat will release data on consumer prices in the Euro area, while the CPI is forecasted to add 0.1% in May on the annual basis, a first positive inflation reading since November 2014.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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The common currency managed to rebound for a third consecutive day on Friday, while supported by 55-day SMA, currently at 1.0951. However, EUR/USD failed to return back above the 1.10 round level. At the moment the nearest resistance lies at 1.1050 (20-day SMA; weekly R1), which gives the pair some space for gains in the short-term. On the other hand, in case of a drop below 1.0937 (weekly PP), the Euro's outlook will change back to bearish.
Hourly chart
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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 slumped noticeably over the weekend to just 37%, down from 44% on Friday.
It proclaims that in case the EUR/USD rises in value, the pair's potential rebound is likely to be limited by the weekly R1 at 1.1055. On the other hand, a downward development of the Euro can be extended down to the weekly S2 at 1.0747.
Spreads (avg,pip) / Trading volume / Volatility
Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between May 1 and Jun 1 expect, on average, to see the currency pair around 1.12 by the end of August. Though the majority of participants, namely 54% of them, believe the exchange rate will trade below this level in ninety days, with 37% alone seeing it below 1.08. Alongside, 19% 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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