I hope you are having a great weekend so far, spending time with your family and loved ones.
The week brought us a range of 200+ pips.
I mentioned in the previous EUR/USD Weekly Review that the currency pair may range between 1.3800 and 1.3600, each of them strong lines to be reckoned with. Indeed we top up around 1.3800 and bottomed slightly below 1.3600. It is important to always remember that resistance and support lines are never a single pip.
The week was poised to be a turning point in the Greek deficit problem. Reports of a German plan to back a Greek solution surfaced. During the EU summit, strong words of support were heard. Alas the strong words fell short of a concrete plan and investors were disappointed. Sentiments went down the drain like a flush of the toilet bowl.
The Greek problem is bad. Recent figures suggest that the deficit is likely to reach above 10% of the GDP. Investors do not like a troubled country. Even if a concrete solution is devised, there are talks of concern with regards to a stalled recovery in the Eurozone due to the extra resources needed to solve the problem. Do not forget that Spain and Portugal are potential hotspots too.
Over in the far east, China is still on the move to curb speculative growth and bubbles. The recent move was the order by the Chinese central bank to banks of the need to increase reserves. China is the world’s second largest economy. Investors are hoping to see a China led global recovery. These measures to slow growth brings apprehension to investors.
Economy releases from both the US and EURO remain mixed. The market is hesitant and this can be seen with the S&P 500 ranging between 1060 and 1080 too.
From a technical perspective, we are in a major bearish momentum. The currency pair often stops for a few days before resuming the drop. The apparent exception was this week. No doubt 1.3600 has strong technical roots and should it fail, we may be in for a bigger drop. Note that the currency pair had been repeatedly testing 1.3600.
We have a number of important releases in the upcoming week. German ZEW Economic Sentiment hails from the Euro Zone. Over across the Atlantic, we have Building Permits, PPI, etc. There are many more and hence do head over to the economic calender for a heads up.
The EUR/USD appears to hang by a thread over the 1.3600 line. If more negative developments turn up, risk aversion may push it down. We may range between 1.3400 to 1,3600. However if positive developments arrive to save the day, a trip up 1.3800 will not be surprising.
Trade safely and do practice proper money management.
Read more about the EUR/USD at my buddies’ wonderful blogs.
Forex Crunch writes a weekly EUR/USD outlook. It is a very popular write up and he is one of the best.
Winners Edge Trading with his great technical analysis brings about much knowledge to learn.