The common European currency closed the trading week at 1.3219 on Friday, August 22nd, 2014.
Monday's trading session started from 1.3185. this is the level that currency pair declined to over the weekend. As of today's European trading session, the currency pair is trading within the scope of the 1.3185-1.3208 price range, Market Leader reports.
Apparently, the current weakness of the common European currency against the US Dollar is caused by the fact that the overall economic situation in Germany, the Eurozone's biggest economy, is currently deteriorating. In particular, the recent index showing the business climate in Germany has been going down for 4 consecutive months. This is definitely a wakeup call for the entire Eurozone economy and its common currency.
According to Mario Draghi, President of the ECB, the Eurozone economy may need more time and stimuli to recover form the current stagnation. As for the Ifo business climate index, which is based on the opinions expressed by 7000+ managers, dropped from 108 points in July to 106,3 points in August. The decline appeared to be even deeper than expected sine the experts had anticipated a drop down to 107 points.
Apparently, the current situation around Ukraine coupled with sanctions against Russia keep on affecting Germany and other European economies since their trade relations are in jeopardy.
EURUSD Prospects
According to the comprehensive technical analysis conducted by Masterforex-V Academy, the H4 chart of EURUSD indicates the following state of affairs. The mid-term bias is bearish. The tendency has been going on since 1.3699. This is the starting point for the bearish 5-wave count: 1.3699-1.3575 (wave 1) + a bullish reaction (wave 2) 1.3575-1.3650 + waves 3 and 4 (1.3650-1.3332 and 1.3332-1.3432 respectively). At this point, the currency pair keeps on building wave 5 starting from 1.3432. At this point, the 5th wave is an incomplete 3-wave count itself. Sub-waves 1 and 2 (1.3432-1.3335 and 1.3335-1.3411) are completed. The forming of the 3rd sub-wave is still underway, starting from 1.3411.
The closest level of support is 1.3180 - Fibo 138.2%. The closest level of resistance is the top of the descending MF sloping channel.
