- Commands to buy the Euro versus the US Dollar in 100-pip range from the spot are strongly bearish (33% long / 67% short)
- The closest resistance for this pair is located at 1.0875
- At the same time, the nearest support is currently placed at 1.0795
- Important economic events to follow in the next 24 hours: Euro zone Current Account (May), Bundesbank Monthly Report
US housing starts recovered strongly in June, while building permits surged to near the highest level in eight years, adding to signs of a rapidly strengthening housing market. Groundbreakings on new homes soared 9.8% to a seasonally adjusted annual rate of 1.17 million units, according to the Commerce Department. May starts were revised up to 1.07 million units from 1.04 million units reported previously. At the same time, permits for future home construction surged 7.4% to 1.34 million units, marking the highest level since July 2007. Measured on annual basis, housing starts rose 26.6%, while building permits advanced 30% in June.
A separate report showed US consumer prices climbed for a fifth consecutive month in June amid higher fuel and food costs. The cost of living in the US rose a seasonally adjusted 0.3% in June from the previous month, the Labor Department reported. Measured on a yearly basis, prices inched up by 0.1%. When excluding volatile energy and food components, core prices climbed 0.2% last month and 1.8% from a year earlier.
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
EUR/USD managed to close below the monthly S1 on Friday and reached the 1.0830 mark by the end of last week's trading. Therefore, the pair prolonged its losing streak to three consecutive days, thus falling 170 pips since Wednesday. The short-term outlook provides little encouragement for bulls, as the nearest support is located at 1.0795 (Bollinger band), which is followed by the 2003 low at 1.0762. Bears are going to aim at the latter level, and this scenario is also shared by aggregate indicators on a daily time frame.
Hourly chart
EUR/USD sentiment remains positive, pending orders at low levels
Meanwhile, the portion of pending orders to buy the Euro against the US Dollar in 100-pip range from the spot price remains fairly low, as bullish side added just one percentage point in the past 72 hours to hit the 33% mark.
It indicates that in case the EUR/USD rises in value, the pair's near-term gains should be limited by the monthly S1 at 1.0875. On the other hand, a downward development of the Euro can be extended as low as the 2003 low at 1.0762.
Spreads (avg,pip) / Trading volume / Volatility
Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between Jun 20 and Jul 20 expect, on average, to see the currency pair around 1.11 by the end of October. Though the majority of participants, namely 53% of them, believe the exchange rate will drop even below 1.10 in ninety days, with 34% alone seeing it below 1.06. Alongside, 20% of those surveyed reckon the price will trade in the range between 1.10 and 1.16 by the end of October of this year.