- Commands to buy the Euro versus the US Dollar in 100-pip range from the spot are strongly bearish (41% long / 59% short)
- The closest resistance for this pair is located at 1.0949
- At the same time, the nearest support is currently placed at 1.0875
- Important economic events to follow in the next 24 hours: Italy Retail Sales (May), US Existing Home Sales (Jun)
Moody's Analytics warned that the European Central Bank's QE worth 60 billion euros a month might be fuelling housing bubble in the UK, Germany and Norway. The QE programme is intended to inject new, cheap money into the European financial system through a series of asset purchases to bolster uneven and fragile Euro zone's economy. Yet, the central bank cannot guarantee that money is invested in areas where it may be needed the most. Thus, borrowers attracted by easy money and low interest rates on mortgages appeared to be home buyers in Northern Europe. According to Moody's calculations, average house prices in Norway have swollen more than 30%, in Germany by nearly a quarter, and in the UK by almost 15% since 2010.
Meanwhile, Athens submitted legislation to parliament on Tuesday required by international lenders to begin negotiation on a multi-billion euro rescue package. Prime Minister Alexis Tsipras has until Wednesday night to get those measures adopted in the assembly. In the meantime, Economic and Monetary Affairs Commissioner Pierre Moscovici said if the Greek government can deliver on the terms of its third bailout agreement, the country's creditors are ready to provide the much discussed debt relief. The International Monetary Fund has called for Euro zone governments to reduce Greece's debt, saying it is one of the prerequisites to boost the country's economic performance.
US home sales to continue rising in June
The only visible statistical data release from Europe will be published in Italy on July 22. Retail sales in the third biggest economy of the Euro zone are expected to have added just 0.1% in May, down significantly from a 0.7% jump seen a month before. At the same time, US existing home sales are forecasted to grow further, up from 5.35 million to 5.4 million in June on an annual basis. These releases are awaited today at 9:00 AM GMT and 14:00 PM GMT, respectively.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 failed to consolidate below the May low at 1.0818, therefore giving bulls a chance to push the pair back to the upside. They used this opportunity and sent the Euro as high as 1.0940, thus making a 100-pip rebound on a daily basis and erasing losses of three previous days. EUR/USD is now being capped by the weekly pivot point at 1.0949, while daily indicators are invariably remaining bearish. As a result, the near-term outlook will depend on the ability of longs to close the pair above the mentioned resistance.
Hourly chart
EUR/USD sentiment deteriorates considerably, pending orders rebound
Meanwhile, the portion of pending orders to buy the Euro against the US Dollar in 100-pip range from the spot price regained some strength from yesterday, as it added seven percentage points to reach the 41% mark.
Nonetheless, it still indicates that in case EUR/USD rises in value, the pair's near-term gains should be limited by the 100-day SMA, currently at 1.10. On the other hand, a downward development of the Euro can be extended down to May low at 1.0818.
Spreads (avg,pip) / Trading volume / Volatility
Community is undecided on perspectives of the Euro versus US Dollar this week
Roberto3, one of the community members participating in the survey, motivates his negative outlook towards the common currency by saying that he expects "an overall downtrend and the breaking of the low at 1.0818, if the price breaks this level, it can retrace a little bit, but overall it will continue to go down again." Moreover, Jighesh adds that "the EUR/USD pair is bearish on essentially every time frame, however, it is facing some major daily support, and the US Dollar Index is pushing up against heights."
Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between Jun 22 and Jul 22 expect, on average, to see the currency pair just above 1.10 by the end of October. Though the majority of participants, namely 54% of them, believe the exchange rate will drop below this mark in ninety days, with 33% alone seeing it below 1.06. Alongside, 22% 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.