EUR/USD Forecast Review 21 May 12 10


Good day forex traders.


How is your weekend coming along? I hope you made money in forex and did not speculate against that strong down trend!

In the previous weekly EUR/USD forecast, we noted a bearish target of 1.28. Greece was struggling to form a government and prevent a second voting. A few European officials commented on the need to have growth policies among the current austerity measures.


EUR/USD chart


Technical Analysis

Looking at the EUR/USD chart above, the currency pair did test the previous low above the 1.26 line.

SMA 20 = Bearish

SMA 50 = Bearish

A late week bullish correction sent the EUR/USD right up towards the 1.28 support turned resistance. Any bullish momentum needs to overcome this region first. With the current sentiments still bearish, any spark of risk aversion may send the currency pair tumbling back down towards 1.26.


Fundamental Analysis

Economic data from the US was not encouraging this week as unemployment claims suggested a lack of improvement pace sent in the beginning of the year. A job slowdown if you were to call it. The US Treasury Secretary commented that the Euro Zone deficit crisis threatens the US economy. As i mentioned in my opinion article on whether the growth of the US is sustainable, as rosy as it seems, the US economy faces immense economic challenges.

Take a look at the S&P 500 and you can see that crazy drop since the beginning of May.


Across the Atlantic, the Euro Zone reports nothing new. Ie. It continues to be in a crisis mode, Greece continues it’s love hate relationship regarding Euro membership and European officials continue to push for their respective school of thoughts. Growth versus Austerity. Ha!

Not forgetting the bickering and then commitments to ensure the continuity of the Euro currency, Euro Zone and the determination to keep Greece in the Euro Zone. In fact just as recent as this weekend, European Union leaders said in the G8 meetings that they will do the necessary to ensure stability of the financial system in the European Union and continue to cut deficit.

Hmmm do you think there will be a forex gap again this week?


Trade Safely.


Related Forex Articles from the Koala Forex Training College.

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  • The Forex Koala

    Having observed the EUR/USD since 2008, i must say that often media coverage plays a strong role. Gone are the days of pure fundamental trading! Sentimental trading is now the de facto trading style. Forex koalas please buckle your proper money management seat beats and trade WITH the sentiments .. never against :)

  • George McCall

    The EUR/USD ends the week with another cliff hanger. As has been correctly pointed out, the EUR/USD sits at resistance. The question is whether that resistance will break and become support or remain as resistance. The open tonight will be very telling. If there is a gap up, then I think there will be a test of the 1.30000 levels possibly higher. If there is no gap or a gap lower, the resistance would have been confirmed and I think we can expect new yearly lows to be created.

    Fundamentally it is not so clear. The US economy is not looking quite as positive as it has been looking. This mean that possibility of the FED moving into QE3 has increased. It must not be forgotten that the FED has a dual mandate. Inflation in the US remains benign and if QE3 would reduce unemployment without causing rampant inflation above the 2% target, I think the FED must be duty bound to move forward into QE3. In my opinion unemployment in the US is one of the greatest current tradeswomen for the people of America. I think Ben Bernanke also sees it that way. Thus unless there are the continued growth in jobs as seen earlier in the year, QE3 will almost be a certainty and EUR/USD will be heading back to the 1.40000 level and possibly above.

    The situation in Europe is so bad that it cannot get worse. Every piece of bad news has already been priced in. Looking ahead it would appear that no potential calamities in the week ahead or on the horizon generally. Things should simple bounce along the bottom with a bit of risk returning.

    Under the current European treaties, Greece cannot leave the Euro, so that debate is dead in the water.

    Consequently, I think we are going to see the return of a bit of Euro strength over the coming sessions. However something unexpected may come out the woodwork and send it plummeting down.

    • The Forex Koala

      Excellent views.  George.. did you get my email the other time? 

  • FreddyFX

    EASY ADVISE, guys !!!!!

    Just trade what your charts show you.
    I scalp ONLY M1 charts and laughing my heart out at all the analysts with their serious sounding comments.
    Glad at least here I can find one that makes sense, well done !!

    • The Forex Koala

      Lol. Good job on that. 1m however is too exciting for old forex koala me :p

      • FreddyFX

         I am ONLY 62, are you older than I am ???

        NOTHING to it, good tools are half the job.

  • The Forex Koala

    Hey folks do remember to drop by the home page to vote in your opinions for the new polls !

    • Sayed Haider

      good analysisForex Koala…I can see that Euro really drop as you advised I mean 500…If I had taken it seriously then 5000 dollars would have made..anyway something is achieved if not 5000 dollars. But indeed your views wins and it happened..good work man

      • The Forex Koala

        Hey. No worries on that. The market will always be there. Proper money management and trading is more important. Masoud is a great forex koala !

      • The Forex Koala

        As in he also predicted a drop. Did you read his review too ?