- Commands to buy the Euro versus the US Dollar in 100-pip range from the spot are bearish (36% long / 64% short)
- The closest resistance for this pair is located at 1.0937
- At the same time, the closest support is currently placed at 1.0865
- Upcoming events on June 3: Euro zone Services PMI (May), Retail Sales (Apr) and Unemployment Rate (May), ECB Interest Rate Decision, Monetary Policy Statement and Press Conference, US Services PMI (May) and ADP Non-Farm Employment Change (May) and Trade Balance (May)
© Dukascopy Bank SA
Spanish and Italian factories led a pick-up in the Euro zone manufacturing activity in May, while German consumer inflation climbed at the fastest pace in eight months as the European Central Bank's new stimulus programme yielded early results. The final manufacturing PMI for the Euro zone rose to 52.2 points in the reported month, compared to 52.0 in April and a flash reading of 52.3.
The manufacturing sector in Germany, however, was in a worse shape in May compared to the preceding month. May's final PMI for Germany's manufacturing sector was at 51.1, down from April's final reading of 52.1 and below the preliminary estimate of 51.4. Meanwhile, German consumer prices rose 0.7% on year in May, up from 0.5% in the previous month.
Watch More: Dukascopy TV
ECB meeting, US ADP data are in focus on Wednesday
June 3 is going to be important day in terms of many influential events that are going to drive markets and, particularly, the EUR/USD currency pair. The ECB Governing Council is meeting in Frankfurt to make an interest rate decision and discuss the most recent inflation developments in the Euro area, following a release of the region's CPI on Tuesday. At the same time, US ADP employment numbers are forecasted to show that the world's biggest economy has created 200,000 new jobs in May, up from 169,000 in April, and this data is due at 12:15 PM GMT.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, EUR/USD slipped below the 55-day SMA/weekly PP and is currently fluctuating around the 1.0940 level. It seems that bulls are not convinced in the pair's ability to rally, even though a close above 1.0960 will provide an opportunity for a jump towards the 100-day SMA at 1.1082. However, a failure to increase in value may result in a sell-off down to the recent low at 1.0820. Meanwhile, daily and monthly technical indicators assume the latter scenario is going to take place.
Hourly chart
© Dukascopy Bank SA
Read More: Technical Analysis
EUR/USD sentiment are pending orders are bearish
Meanwhile, pending orders to buy the Euro against the US Dollar in 100-pip range from the current market price lost one percentage point in the past 24 hours to stay at just 36%.
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 2 and Jun 2 expect, on average, to see the currency pair around 1.12 by the end of August. Though the majority of participants, namely 56% of them, believe the exchange rate will trade below this level in ninety days, with 39% alone seeing it below 1.08. Alongside, 18% 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