The common European currency is continuing to depreciate against the US Dollar in the previously established descending channel pattern. It is most likely that the decline will struggle with the passing of various support levels. However, the rate eventually will reach the trend line of a medium term ascending channel pattern.
As markets expected, the European Central Bank left its interest rates and monetary policy unchanged at its Thursday meeting; however, it signalled that further rate cuts were highly unlikely. Policymakers acknowledged that the 19- country currency bloc was performing strong economically but inflation remained growth remained subdued, forcing the Bank to keep rates and policy on hold. However, policymakers gave a balanced view on the Euro zone economy. Still, the ECB did not even consider an option of lowering its 2.3T euro asset purchases.
US PPI in focus
EUR/USD continues in set pattern
The common European currency continued to trade against the US Dollar in the descending channel pattern, which formed as a result of the pair bouncing off the resistance of the long term pattern's upper trend line at the start of May. During the middle of Monday's trading session the currency exchange rate encountered the resistance of the upper trend line of the descending channel and the 100-hour SMA. As a result a decline began, which on Tuesday morning had reached the support of the 38.20% Fibonacci retracement level at the 1.1188 level. Due to the fact that the retracement level has been already pierced twice, it can be assumed that the support of the Fibo will be passed by the end of the day.
Hourly Chart
Daily Chart
Read More: Technical AnalysisBearish sentiment persists
SWFX traders are 61% short in regards to the pair on Tuesday. Meanwhile, 51% of set up orders are to sell the Euro.
OANDA trader sentiment remains largely bearish, as 69.73% of open positions are short. However, SAXO bank clients have decreased their short positions amount, as 62.51% of open positions are short, compared to 63.46% on Monday.
Spreads (avg, pip) / Trading volume / Volatility
Average forecast says EUR/USD will trade around 1.11 in September
Traders, who were questioned on their longer-term views on EUR/USD between May 13 and June 13 expect, on average, that the currency pair may trade slightly above 1.11 during the second week of September. In general, 49% (+1%) of participants believe the exchange rate will be above 1.12 in the following ninety days. Meanwhile, 45% (+2%) of respondents expect to see the rate below 1.10.