EUR/USD Forecast 17 Sep 12


 

Good day forex traders.

 

Welcome to another weekly review of the EUR/USD. I have to admit that this was once my favorite pair as it was previously trending well. When the ranging started, it went pretty much unpredictable. Bad especially for medium – long term traders like me!

In the previous EUR/USD forecast we noted that the markets were pleased with the recent developments. The currency pair had a technical bullish test on the 1.28 region. The German economy seemed to be escaping the worst of the Euro Zone budget deficit crisis and the ECB bonds purchase program was welcomed as a sign of stabilisation.

 

EUR/USD Forecast

 

Technical Analysis

Looking at the EUR/USD chart above we note a continuation of the bullish momentum. 1.28 did turn out to be a resistance as i mentioned. It fell eventually to the strong pressure.

SMA 20 ( RED ) = Bullish

SMA 50 ( BLUE ) = Bullish

Both SMAs are bullish and this indicates the possibility of continued momentum. An important point to note is that the currency pair is now above SMA 200 and if it holds above it, it may suggests a long term bullish momentum. Watch out for 1.32 if bullish momentum continue.

 

Fundamental Analysis

As I mentioned in the previous forecast, the markets are satisfied with the recent developments and it has progressed to a risk on / risk taking climate for the markets. Globally we observe demand for risker assets such as equities and high yielding currencies.

With the recent positive German economic data, there is hope by investors that the largest economy of the Euro area remains a strong foundation for recovery. The non rejection of the ESM fund by the German court also brought hope that a strong viable solution for the troubled European nations may come toa  reality. A clue to this will be stable controlled bond interests. The ECB plans to purchase bonds will aid in this aspect.

The US Federal Reserve recently announced another round of stimulus. Quantitative easing is usually popular with the investors and apparently it is so now. This may dampen the value of the US Dollar though as surplus supply floods the markets with liquidity.

Greece’s continuing aid disbursements, Spanish debt issues and US unemployment are among the potential party crushers. Monitor closely and trade safely.

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