Good day forex traders.
Welcome to another weekly EUR/USD forecast by yours truly, The Forex Koala ! TFK 🙂
In the previous EUR/USD forecast we noted a late week bullish correction to test the 1.28 region. Having said so, the bearish momentum remained strong and the test of 1.26 remained a possibility. Risk aversion was indeed strong and the S&P 500 had since dropped a fair bit. Nothing encouraging was coming out of the Euro Zone for now.
Looking at the EUR/USD chart above, we noted that 1.26 was hit. I LOVE IT WHEN MY TARGETS WORK! fanfare fanfare
SMA 20 = Bearish
SMA 50 = Bearish
There is no indication of any technical bullish correction although nothing is impossible. Just wanted to warn the LONG supporters that you must know what you are doing if you want to trade against the trend. Nonetheless, any bullish moves will probably seek to test 1.26 first.
Should the bearish momentum continue, i expect a test on the previous 2009 March low of 1.2450+/- first before the currency pair marches on to 1.24.
It seems for now that the German Chancellor, Angela Merkel may be open to a compromise towards the combined Euro Zone bond concept. To folks who are not familiar with this, this basically means a combined bond issuance so that with the backing of better Euro Zone economies such as Germany, the interest demanded will be lower thus offering “rolling in the deep” countries such as Greece a cheaper financing means.
While this should sound encouraging, we all know how difficult it is to come to consensus when it comes to the Euro Zone. After all, this means higher costs of borrowing for Germany and hence just how this compromise will work remains a mystery. Something the markets probably saw little of for now.
Greece’s poll looms closer at June 17 and in the meanwhile, Spain continues to struggle with heightened bond interests.
Over in the US, the S&P 500 remains near the technical support of 1300. A unofficial sentiment index for me, it seems like risk aversion is still plaguing the markets.
Monday is a bank holiday for a number of countries including the US and hence we may see low volume conditions.
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