- 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 1.1213
- At the same time, the nearest support is currently placed at 1.1102
- Upcoming events in the next 72 hours: Germany Import Price Index (May), EU Economic Summit (Day 2), Euro zone M3 Money Supply (May), US Revised Reuters/Michigan Consumer Sentiment (May)
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Following a decline in German business morale in June, consumers also became more cautious for the first time since October, as the Greek debt crisis weighs on the Euro zone's number one economy. The forward-looking GfK consumer sentiment index, based on a survey of 2,000 Germans, declined to 10.1 going into July, down from 10.2 in June. GfK said that Greece's default and exit from the currency bloc, which had seemed a remote possibility, now appears to be quite realistic.
Nevertheless, consumers' income sub-index rose to 57.2 in June, up from 52.0 a month earlier, reaching a new high since German reunification. At the same time the "willingness to buy" sub-index fell to 57.0 from May's 62.6, but remained at a very high level. Workers are likely to see a 3% increase of their wages this year, and given that inflation is below 1%, there would be a considerable increase in disposable income.
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EU Summit to continue for second day
On Friday the European leaders will proceed with the second day of the Summit that is taking place in Brussels. Besides the Greek problem, agenda includes migration policy and UK-EU relationship before the referendum on the EU membership takes place in Britain later in 2016 or 2017. Among fundamentals, the Euro zone money supply data is due at 8:00 AM GMT, followed by revised US consumer sentiment from the University of Michigan at 14:00 PM GMT.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
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Changes of the EUR/USD currency pair amounted to zero on Thursday, as it rejected to move in any direction amid mixed factors that could drive the cross. From the technical point of view, the rate lies just below the 20-day SMA and weekly S1 at 1.12, which are reinforced by the long-term downtrend around 1.1260. Therefore, there is little chance of a rebound, even though five out of eight daily technical indicators are giving signals to acquire the Euro.
Hourly chart
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Read More: Technical Analysis
EUR/USD sentiment still bearish, long pending orders also below 50%
Meanwhile, the portion of pending orders to buy the Euro against the US Dollar in 100-pip range from the spot price lost two additional percentage points yesterday, down from 42% to 40%.
It proclaims that in case the EUR/USD rises in value, the pair's near-term gains can be capped by the weekly S1 at 1.1213. On the other hand, a downward development of the Euro is likely to be extended down to the monthly pivot point at 1.1089.
Spreads (avg,pip) / Trading volume / Volatility
Community suggests the Euro will decline against the US Dollar this week
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Read More: Community Forecasts
Jignesh, one of the community members participating in the survey, motivates his bearish outlook towards the single currency by saying that "the US Dollar is very well supported this week as the index is showing reversal signs around a key retracement. As well, we are seeing pressure from Greece building up and bears renewing shorts to start out the week once again."
Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between May 26 and Jun 26 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 even below this level in ninety days, with 30% alone seeing it below 1.08. Alongside, only 21% 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.
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