- 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 1.1219
- At the same time, the nearest support is currently placed at 1.1124
- Upcoming events in the next 24 hours: Germany Retail Sales (May) and Unemployment Change (Jun), Euro zone CPI (Jun) and Unemployment Rate (Jun), US Consumer Confidence (Jun)
© Dukascopy Bank SA
While all eyes are focused on Greece this week, following the weekend's unexpected and dramatic events, Germany's latest inflation data may provide temporary distraction. Consumer prices in the Euro zone's star economy slid into negative territory in June, the preliminary data showed. According to the German Federal Statistics Office, the flash CPI reading fell 0.1% in the month under review from May, whereas economists had expected a 0.1% rise. Measured on an annual basis, the cost of living in Germany increased 0.3% in June, missing expectations for a 0.5% gain and following the 0.7% growth in May.
Meanwhile, European leaders urge the Greek people to say ‘yes' in Sunday's referendum, expressing their disappointment with breakdown in talks with Greece over the weekend. Both German Chancellor Angela Merkel and the European Commission President Jean-Claude Juncker said that it was Greek side which deliberately moved in the standoff with its European partners.
Watch More: Dukascopy TV
German unemployment data, Euro zone CPI are due on Tuesday
Inflation reading in the Euro area is forecasted to decrease slightly in June, according to the flash estimate today. Analysts predict the headline CPI to decrease from 0.3% to 0.2%, with the core reading falling from 0.9% to 0.8%. This data is due at 9:00 AM GMT and it will be published along with the unemployment rate for the Euro zone, which is estimated to remain unchanged at 11.1%. Meanwhile, the total number of people unemployed in Germany has probably dropped further this month, as the jobless rate should stay flat at a record-low level of 6.4%.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 1.1330 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
A considerable drop in the beginning of trading on Monday managed to provide the common currency with a significant bullish momentum afterwards, and EUR/USD faced no issues when returning back above the 1.12 mark. The main daily resistance was offered by the long-term downtrend at 1.1260, reinforced by the weekly PP from below. Volatility of the pair is likely to stay in place in the near-term, and a possible Greek default may send the Euro downwards again with a target around 1.11 (monthly pivot point).
Hourly chart
© Dukascopy Bank SA
Read More: Technical Analysis
EUR/USD sentiment still bearish, share of long pending orders slumps
Meanwhile, the portion of pending orders to buy the Euro against the US Dollar in 100-pip range from the spot price plunged back below the 50% threshold on Tuesday, down from 52% to 42% on a day-to-day basis.
It proclaims that in case the EUR/USD rises in value, the pair's near-term gains can be capped by the long-term downtrend at 1.1260. On the other hand, a downward development of the Euro is likely to be extended down to the 55-day SMA, currently at 1.1124.
Spreads (avg,pip) / Trading volume / Volatility
Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between May 30 and Jun 30 expect, on average, to see the currency pair around 1.12 by the end of September. Though the majority of participants, namely 52% of them, believe the exchange rate will trade below this level in ninety days, with 34% 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 September of this year.
© Dukascopy Bank SA