- Commands to buy the Euro versus the US Dollar in 100-pip range are negative (33% bullish / 67% bearish)
- The closest resistance for this pair is located at 1.1035
- At the same time, the closest support is currently placed at 1.1007
- Upcoming events on March 7-9: Germany Trade Balance (Jan)
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The European Central Bank will start its quantitative easing programme as soon as next Monday, March 9, Mario Draghi, central bank Governor announced on Thursday. The central bank also decided to leave the benchmark interest rate unchanged at a record low of 0.05%. In addition to that, the central bank revised downwards its inflation outlook for the currency bloc for this year due to persistent decline in oil prices.
The ECB now expects consumer inflation to be flat in 2015, a downward revision from a December forecast of 0.7%. As for 2016, the inflation outlook was revised higher to 1.5% against 1.3% estimated previously, reflecting expectations for the oil rout to wind down. Looking ahead, in 2017, the ECB sees inflation at 1.8% - close, but still below the central bank's goal of near but just below 2%.
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Only German trade data to be published on Monday
As during the majority of Mondays, beginning of the next week will not be rich on fundamental data which can have some influence on the Euro/Dollar currency pair and other crosses of these two currencies. The only indicator with a potential notable impact is going to be the trade balance from Germany. It is estimated to adjust slightly to the downside of around 20.9 billion euros in January after surprisingly strong numbers in December.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
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As estimated, downward pressure on the EUR/USD currency pair remained strong yesterday, caused by the ECB monetary policy meeting in Cyprus. The bears have even managed to send the pair below 1.10 for a short period of time, which marks the lowest level for this cross since the third quarter of 2003. Despite that, a daily closing level stayed just below the weekly S2 at 1.1028. Meanwhile, technical indicators on all time-frames are now mixed, meaning that a sideways development became a more likely scenario.
Hourly chart
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Read More: Technical Analysis
EUR/USD sentiment positive, pending orders fall back below 50%
Additionally, SWFX traders are back to the negative territory in terms of pending orders as the ones to buy the Euro against the US Dollar in 100-pip range from the spot have dropped from 58% yesterday to just 33% this morning, giving a decline of 25% over one trading day. It proclaims that in case the EUR/USD rises in value, the pair's potential rebound can be limited by the monthly S1 at 1.1070. On the other hand, a potential downward development of the Euro is considered to be extended down to the monthly S2 at 1.0943.
Spreads (avg,pip) / Trading volume / Volatility
Community is waiting for the Euro to decline 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 common currency by saying that "EUR/USD is quite oversold at current levels after a strong CPI number, which drove the USD back to resistance." He also added that there are important "NFP numbers will be released, which should trigger some USD buying toward the end of the week."
Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between Feb 6 and Mar 6 expect, on average, to see the currency pair around 1.13 by the end of June. Though the majority of participants, namely 54% of them, believe the exchange rate will drop down even below 1.12 in ninety days, with 24% 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.
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