With derivative contract expirations around the corner, including monthly currency options this coming Saturday, and U.S. 10 year notes yields still above the 2.00%, (last at 2.02%) EUR/USD is currently trading at a stone's throw from yesterday's (Wednesday) year low. EUR/USD is still being pressured on much better than expected U.S. retail sales figures reported on Wednesday. The pair is down so far -0.42% for the week, ahead of plenty of risk events in the nearest term.
The euro has been the weakest currency among majors for last 2 trading days. That's alongside the Kiwi Dollar, it has been printing fresh multi-month lows against USD and AUD while holding modestly well against the yen, pound and Swissy- given these three are still much weaker than the euro in the long term curve. The yen is the weakest of all by far. Since past November, the euro is still in with the solid group, despite that it has retraced more than -5% in the last month and a half.
According to Valeria Bednarik, Chief Analyst at Fxstreet.com: "The EUR/USD hourly chart shows the 20 SMA heading south above the current price while indicators stand in negative territory, which supports a bearish continuation." The analyst adds that the "latest upward corrective movement stalled at $1.2970, former support area adding to the negative bias..." She suggests that key support stands around the $1.2880 area, with stops probably below.".
Once SNB releases its Libor rate and monetary policy assessment today at 08:30 GMT, which could add some volatility to the euro through the EUR/CHF cross, the ECB monthly bulletin will come next, while another EU Economic summit takes place. During the American morning, the focus will shift to the U.S. PPI and jobs data, both to be published at 12:30 GMT. Most important will be Friday's U.S. CPI, which coupled with the U.S. TIC long-term purchases and Empire State Manufacturing Index, and followed by Preliminary University of Michigan consumer sentiment, will be the events to follow.
Worth noting for euro traders, other than the potential headlines coming from the EU 2-day summit, would be the possible deal over the Cyprus bailout, which will be " unofficially" discussed on Friday. As Peter Jackson from FxBriefs.com said:
Cyprus may be forced to raise money from levies on deposits, other taxes such as corporate tax (which could be raised to 12.5% from 10%), as well as the possibility of a much opposed financial transaction tax.
All in all, despite the fact that commercial/hedgers traders reversed net short positions according to latest COT, and are now holding the long side of the trade while speculators big and small hold the other net side, market sentiment doesn't seem to be very bullish on the common currency. Many analysts are still calling for lower lows in the nearest term.
"EUR/USD broke below a recent consolidation low around $1.2955 and reached $1.2922 before stalling. This continues the bearish outlook," says Fan Yang, analyst at FXTimes, expanding that "with the $1.2875-$1.2885 Fibonacci confluence zone (50% of $1.2041-$1.3710, 78.6% of $1.2659-$1.3710) in sight." He tips that "ability to push back above $1.3075 will be needed to neutralize the bearish outlook."
According to the latest Reuters poll on EUR/USD from over 61 forecasters from March 06, the median target for 1-month in advance goes to $1.3040 in EUR/USD, with the most pessimistic betters being RBS to $1.2750, while for 6 months from now this bank goes even lower and sees EUR/USD at a $1.2200 low. The median among this 61 forecaster 6-month ahead goes to $1.2900 for EUR/USD.