- 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 1.1019
- At the same time, the nearest support is currently placed at 1.0973
- Important economic events to follow in the next 24 hours: Germany CPI (Jun) and ZEW Economic Sentiment (Jul), Euro zone Industrial Production (May) and EcoFin Meeting, US Retail Sales (Jun)
After more than 17-hour long summit and sleepless night in Brussels, European leaders have unanimously reached a third bailout deal for Greece on Monday. The debt-stricken country will get a new loan programme worth up to 86 billion euros from the European Stability Mechanism. The agreement included a 50 billion euro Greece-based fund that will privatise or manage Greek assets. Out of that amount, 25 billion euros would be used to recapitalise Greek banks, which have been closed for two weeks, with withdrawals at cash machines limited to 60 euros per day. Jeroen Dijsselbloem, the head of the Eurogroup, said that talks would continue in the week over the details of the bailout. Meanwhile, parliaments in several Euro zone states have to approve a new bailout.
After trust was severely damaged between Greece and its creditors, Greece was demanded to pass reforms demanded by the Euro zone by Wednesday. Other reforms that Greece has to pass include an overhaul of Greece's pension system and widespread sales tax hikes that could face opposition in the Greek parliament. Successful passage, however, would not a guarantee that the country would be saved. It would merely open the door to a final agreement later this week for a three-year bailout – Greece's third in five years.
US retail trade to expand further in June
Retail sales in the world's biggest economy are estimated to rise strongly for a second consecutive month, by gaining 0.7% on the core basis and 0.2% in terms of the headline reading. This data is due today by 12:30 PM GMT. Meanwhile, German ZEW Economic Sentiment, one of the most important indicators for measuring confidence among investors and analysts, is forecasted to decrease slightly in July, down from 31.5 to 30.6 points. In case this index is released in line with expectations at 9:00 AM GMT, it will mark the fourth consecutive month of a decrease.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 September. In the medium-term the common European currency may show spikes as high as 200-day SMA and 2005 low at 1.16, but the downtrend will remain the main resistance and should be capable of pushing the cross back in the direction of 1.05-1.10 area in the long run.Daily chart
Initially, the EUR/USD surged noticeably on Monday after the deal with Greece was reached. However, later in the day the Euro lost steam and plunged down to 1.10, thus bringing daily fluctuations up to 200 pips. A recovery is possible in the short-term, and bulls will attempt to recover above 100-day SMA at 1.1019. However, the medium-term outlook remains bearish, while a close below 1.0973 (weekly S1) will open the doors towards the recent low at 1.0916 (Jul 7), followed by the monthly S1 at 1.0875.
Hourly chart
EUR/USD sentiment volatile, pending orders slump significantly
Meanwhile, the portion of pending orders to buy the Euro against the US Dollar in 100-pip range from the spot price plummeted by twelve percentage points to 40% in the past 24 hours, after staying slightly above 50% for a short time period yesterday.
It indicates that in case the EUR/USD rises in value, the pair's near-term gains are likely to be limited by the weekly pivot point at 1.1094. On the other hand, a downward development of the Euro can be extended as low as 1.0916 (Jul 7 low).
Spreads (avg,pip) / Trading volume / Volatility
Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between Jun 14 and Jul 14 expect, on average, to see the currency pair around 1.12 by the end of October. Though the majority of participants, namely 48% of them, believe the exchange rate will drop below this mark in ninety days, with 35% alone seeing it below 1.08. Alongside, 21% of those surveyed reckon the price will trade in the range between 1.12 and 1.18 by the end of October of this year.