- Commands to buy the Euro versus the US Dollar in 100-pip range are slightly positive (51% bullish / 49% bearish)
- The closest resistance for this pair is located at 1.1414
- At the same time, the closest support is currently placed at 1.1368
- Upcoming events on February 24: Germany Final GDP (Q4), Eurozone CPI (Jan), ECB President Draghi's Speech, US Markit Services PMI and Consumer Confidence (Feb), Federal Reserve Chairwoman Janet Yellen's Speech to Congress
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Euro zone finance ministers agreed to extend the Greek bailout deal for four months on Friday, but urged Greece's government to come up with a list of reforms by Monday. The list will include measures to tackle tax evasion and streamline the civil service, Minister of state Nikos Pappas said. Although, Alexis Tsipras, Greece's Prime Minister managed to keep the country in the Euro zone, he was blamed for selling illusions to voters, as he failed to keep his pre-election pledge to pull out the country from the international bailout.
Meanwhile, Euro zone manufacturing is gradually improving, while activity in services sector continues to increase at a solid pace. The flash manufacturing PMI for the Euro bloc climbed to 51.1 in February, up from 51.0 in the preceding month and reaching the highest level in seven months. Activity in the Euro bloc's services sector rose further, with the corresponding index ticking up to 53.9 in the reported month, compared with 52.7 a month earlier.
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Euro zone inflation expected to decline further
According to the expectations, the consumer price index in the Euro zone is likely to decline down to -0.6% on the annual basis in February of this year, caused by a plunge of oil prices. Besides that, Germany's quarterly economic growth is projected to be confirmed at 0.7% for three months through Dec 31. Moreover, markets are going to watch closely the speech of Janet Yellen, the Fed Chairwoman, as she is forecasted to give more insight on an upcoming rate increase from the regulator later this year.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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Last Friday, EUR/USD traded in a rather wide range of around 130 pips, the highest since February 6. The lowest mark was registered below the 1.13 major level. Despite that, the single currency managed to rebound toward 1.1380 and close just below this level, thus posting a small daily net increase of around 15 pips. At the moment the pair is well supported by the weekly PP at 1.1368, which will try to push the pair above 1.14 in the near term.
Hourly chart
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Read More: Technical Analysis
EUR/USD sentiment remains below 50%
On the other hand, SWFX pending orders to acquire the Euro against the US Dollar in 100-pip range from the spot price gained some bullish momentum to hold a slight majority of 51% in the morning on Monday. It proclaims that in case of pair's increase in price, its medium-term gains are likely to be extended to the weekly R1 at 1.1458.
On the other hand, a potential decline of the Euro is considered to be possibly limited by the Bollinger band at 1.1310.
Spreads (avg,pip) / Trading volume / Volatility
Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between Jan 23 and Feb 23 expect, on average, to see the currency pair around 1.13 by the end of May. Though the majority of participants, namely 52% of them, believe the exchange rate will drop down even more below 1.12 in ninety days, with 28% alone seeing it below 1.08. Alongside, 22% of those surveyed reckon the price will trade in the range between 1.12 and 1.18 by the end of May of this year.
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