- Commands to buy the Euro versus the US Dollar in 100-pip range from the spot are strongly bearish (32% long / 68% short)
- The closest resistance for this pair is located at 1.0973
- At the same time, the nearest support is currently placed at 1.0875
- Important economic events to follow in the next 24 hours: US CPI (Jun) and Housing Starts/Building Permits (May), Reuters/Michigan US Consumer Sentiment Index (Jul)
The European Central Bank kept its interest rates unchanged for already the eighth consecutive meeting. The Governing Council maintained the key refinancing rate at 0.05%, the deposit rate at negative 0.2%, while the marginal lending rate at 0.3%, all in line with the market expectations. The ECB has not changed its key rates since September 10th last year. Furthermore, the ECB confirmed that it will continue its quantitative easing program by purchasing 60 billion Euros worth of assets till the end of September next year. ECB believes that it can sustain inflation rates close to 2% in the medium-term by fully implementing all of its monetary policy measures.
Speaking at the ECB's monthly press conference, the President Mario Draghi said the central bank raised its emergency-lending ceiling to Greek banks by 900 million euros, putting the total amount of ELA at nearly 90 billion euros. The decision came after the Greek parliament voted in favour of austerity reforms, paving the way for the third bailout package. This would allow Greek banks to open as soon as on Monday, after being closed for three weeks. Draghi also said that debt relief for the debt-stricken country in necessary, something that Germany and other North European countries are opposing to. Yet, ECB President highlighted that there was no decision to write down any of Greece's debt pile.
US inflation to strengthen in June
On the contrary to the Euro zone or Britain, where inflation readings experienced slight declines last month, the consumer price index in the world's largest economy is in turn estimated to pick up in June. The headline reading is expected to bounce off the zero level to reach 0.1%, while core inflation has probably risen from 1.7% to 1.8%. This data is due today at 12:30 PM GMT.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 lost around 65 pips during the trading on Thursday. The Dollar managed to strengthen against the common currency for a second consecutive day, but losses of the pair were successfully limited by the monthly S1 at 1.0875. Nonetheless, a new July low was set at the 1.0855 mark. At the moment EUR/USD is required to consolidate below the mentioned monthly support in order to confirm the medium-term bearish outlook. For the next 24 hours, however, the neutral forecast seems to be more appropriate.
Hourly chart
EUR/USD sentiment grows, pending orders weaken further
Meanwhile, the portion of pending orders to buy the Euro against the US Dollar in 100-pip range from the spot price decreased to the smallest level in five weeks, by retreating from 38% to 32% 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 100-day SMA at 1.1009. On the other hand, a downward development of the Euro can be extended as low as the May low at 1.0820.
Spreads (avg,pip) / Trading volume / Volatility
Community sees the Euro rebounding versus the US Dollar this week
Jignesh, one of the community members participating in the survey, motivates his positive outlook towards the common currency by saying that "EUR/USD continues to struggle to take out weekly support at 1.0970. Last week, we once again saw strong buying in that area, leaving the pair to close with a bullish candle for the week. Dips should be bought this week as the US Dollar continues to be sold off against strong daily resistance."
Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between Jun 17 and Jul 17 expect, on average, to see the currency pair at 1.11 by the end of October. Though the majority of participants, namely 53% of them, believe the exchange rate will even drop 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.