Good day forex traders.
How is your weekend so far? I hope it is well. Many folks were caught by that bullish spike and i hope everything is ok for you.
In the previous EUR/USD forecast we noted that the currency pair breached the 1.22 support. Although the fundamental situation remains depressing, strong term sentimental rallies are often seen due to speculations.
Looking at the EUR/USD chart above we noted the bullish spike that almost tested the 1.24 region.
SMA 20 = Bearish
SMA 50 = Flat
With the SMAs no longer aligned, the possibility of a consolidation may be considered. It is important to note that the SMA 50 ( Blue line ) often acts as an immediate resistance and hence this may cap any bullish correction for now. Any bearish down move will need to tackle 1.22 again.
I mentioned about sentimental rallies last week and true enough, this week gave us one. The sudden surge of the euro currency was mainly attributed to the hawkish comments of the ECB’s Draghi. He mentioned that they would do whatever it takes to preserve the 17 nation currency. This was seen as a statement of support and an indication of possible action by the ECB to prop up the ailing Euro Zone economy.
I would like to remind our readers that these are sentimental moves. Ie There is no sustainable reason supporting this move. When the dust settles and the same depressing fundamental situation returns, it is likely that the EUR/USD resumes it’s bearish descent.
There are a number of economic releases this coming week and a few of them are Spain’s. An object of scrutiny these days, any adverse figures may affect the sentiments and hence one must take caution when trading.
Furthermore the slow down of China seems to be increasing and hence close monitoring must be done.