- Commands to buy the Euro versus the US Dollar in 100-pip range are negative (37% bullish / 63% bearish)
- The closest resistance for this pair is located at 1.1256
- At the same time, the closest support is currently placed at 1.1177
- Upcoming events on March 4: Spain, Italy, France, Germany, Euro zone and US Services PMI (Feb), US ADP Employment Change (Feb) and ISM Non-Manufacturing PMI (Feb)
© Dukascopy Bank SA
Inflation in the currency bloc rebounded somewhat in February from the recent six-year low, moving closer to positive territory. Nevertheless, the indicator has remained in red for the third consecutive month. Prices in 19 member states of the Euro zone were 0.3% lower than in the previous year in February, following a dramatic 0.6% fall in January. Analysts, however, had called for a 0.5% decline.
Meanwhile, the unemployment rate in the Euro zone edged down again in January. According to Eurostat, the Euro zone jobless rate dropped to 11.2% in the reported month, marking a year that the unemployment rate stayed below 12% level. Considerable improvement has been reported in Germany, where the labour market continued to strengthen as the number of unemployed people fell for the fifth straight month in February.
Watch More: Dukascopy TV
Services PMI data from Euro zone to be watched on Wednesday
Tomorrow, a number of major European economies are publishing their PMI indicators for the tertiary industry. Activity in the services sector is expected to improve for Italy, France and Germany. Alongside, services PMI for Spain is estimated to stay unchanged at 56.7 points. Besides that, markets forecast that US employers added as many as 220,000 new jobs in February, according to the ADP.Read More: Fundamental Analysis
EUR/USD set to weaken in the long-term
The long-term outlook for the EUR/USD currency pair is remaining bearish. On January 22, the ECB has made a long-awaited decision to expand its asset purchases which will continue pushing the Euro to the downside. Moreover, the lowest point since the year 2003 around 1.1113 has already been hit by EUR/USD cross. Taking into account present monetary conditions and bearish outlook for the Euro, the pair has a chance to go below 1.10 towards the end of the first quarter of this year. Short-term bullish actions may take place, but their impact and size are not expected to be appropriate for the common currency to commence a stable recovery in the long-run. Moreover, some market participants suggest it may fall further and even trade towards the parity in course of this year.Daily chart
© Dukascopy Bank SA
EUR/USD currency pair is remaining broadly stable for a third day in a row. On Monday, the single currency registered completely no daily change in any direction and stayed just below the Bollinger band around 1.1180. On Tuesday morning, however, the pair is gaining some value, being already supported by the mentioned technical level. If the pair manages to consolidate well-above 1.12 round level, the short-term expectation will become moderately bullish, with a target at 1.1256 (weekly PP) during next 48 hours.
Hourly chart
© Dukascopy Bank SA
Read More: Technical Analysis
EUR/USD sentiment and pending orders are negative
Additionally, SWFX pending orders to buy the Euro against the US Dollar in 100-pip range from the spot are in the minority and account for just 37% right now. It proclaims that in case the EUR/USD rises in value, the pair's medium-term gains are likely to be capped by the monthly pivot point at 1.1302. On the other hand, a potential downward development of the Euro is considered to be extended down to the monthly S1 at 1.1070.
Spreads (avg,pip) / Trading volume / Volatility
Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between Feb 3 and Mar 3 expect, on average, to see the currency pair around 1.1350 by the end of June. Though the majority of participants, namely 52% of them, believe the exchange rate will drop below 1.12 in ninety days, with 23% alone seeing it below 1.08. Alongside, 23% of those surveyed reckon the price will trade in the range between 1.12 and 1.18 by the end of June of this year.
© Dukascopy Bank SA