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Thu, 09 Jul 2015 06:30:02 GMT
Source: Dukascopy Bank SA
- Commands to buy the Euro versus the US Dollar in 100-pip range from the spot are marginally bearish (47% long / 53% short)
- The closest resistance for this pair is located at 1.1114
- At the same time, the nearest support is currently placed at 1.1029
- Upcoming events in the next 24 hours: Greece Unemployment Rate (Apr), US Unemployment Claims (Jul 3)
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The Greek government sent a formal request for a new bailout to the European Stability Mechanism, asking for a three-year loan facility. In return, it pledged to implement reforms to taxes and pensions starting next week and to honour all its financial obligations. Yet, Athens has to follow the request up with a detailed plan by Thursday on how the government plans to reform its economy if it is to receive fresh bailout cash to prevent bankruptcy and a possible exit from the Euro zone. The scheduled finance ministers' teleconference on Wednesday was cancelled, but the request would be dealt with by the Eurogroup Working Group, comprising senior officials.
Meanwhile, European leaders have prepared a Grexit scenario, said European Commission President Jean-Claude Juncker. However, the path to a Euro exit by Greece remains uncertain. European law treats the Euro as "irrevocable" and makes no provision for a member state to leave or be pushed out. The possible exit mechanism would mean European governments halt aid to Greece, leading the ECB to stop supplying cash to Greece's banks. The governing council member Christian Noyer said the ECB will end its support for Greece if "there is no political accord in sight".
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US jobless claims to remain confidently below 300K
Unemployment claims in the US are expected to continue trending mainly sideways at relatively low levels below 300,000. The average forecast for the week ended July 3 stays at 274,000, down from 281,000 a week before, and the data is due at 12:30 PM GMT. Still, analysts suggest that claims for benefits can be volatile in the nearest future amid seasonal factors in the auto industry and the US Independence Day. Meanwhile, Greek jobless rate is under the risk of showing a rise today, as April numbers at 9:00 AM GMT will follow the unemployment level of 25.6% in March.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 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
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Despite fears surrounding Greek bailout talks, EUR/USD climbed noticeably Wednesday, by crossing the nearest resistance represented by the 100-day SMA, currently at 1.1029. The next supply at 1.1114 (weekly PP) has been approached in the morning on Thursday. The short-term outlook implies testing of this mark; however, gains are unlikely to extend in the long run. Moreover, both daily and monthly technical indicators are now sending signals to sell the Euro against the US Dollar.
Hourly chart
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Read More:Technical Analysis
EUR/USD sentiment worsened again, pending orders improved
The share of SWFX long open trades dropped by four percentage points to 47% in the past 24 hours, therefore returning back below the 50% threshold in the morning on Thursday. In the meantime, OANDA traders are holding just 34% in long open positions, which make the EUR/USD's sentiment the worst among all major currency pairs there. Saxo Bank clients are also strongly pessimistic towards the shared currency, where the bulls are accounting for just 35% (-5%) of all traders in the morning on Thursday.On the contrary to market sentiment, the portion of pending orders to buy the Euro against the US Dollar in 100-pip range from the spot price gained seven extra percentage points from yesterday and is currently approaching the 50% mark.
It still proclaims that in case the EUR/USD rises in value, the pair's near-term gains can be capped by the 20-day SMA, currently at 1.1141. On the other hand, a downward development of the Euro is likely to be extended below the Jul 7 high at 1.0918.
Spreads (avg,pip) / Trading volume / Volatility
Community is waiting for the Euro to plunge versus the US Dollar this week
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Read More:Community Forecasts
geula4x, one of the community members participating in the survey, motivates his bearish outlook towards the common currency by saying that "EUR/USD is under bearish pressure after Greece has voted NO in the referendum on Sunday. This means that now Greece might exit the Euro Zone altogether. This poses a serious fundamental problem to the whole EZ. Resistance lies around 1.1130, which previously supported price between June 23 and 26. Support lies around 1.0900, which supported price at June 1st and 2nd, before a strong bounce higher."
Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between Jun 9 and Jul 9 expect, on average, to see the currency pair just below 1.12 by the end of October. Though the majority of participants, namely 51% of them, believe the exchange rate will drop below this mark in ninety days, with 35% alone seeing it below 1.08. Alongside, 20% of those surveyed reckon the price will trade in the range between 1.12 and 1.18 by the end of October of this year.
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