Good day forex traders.
I hope you are having a great weekend so far. i am having a migraine now but hey things could be worst. Positivity is important 🙂
In the previous EUR/USD forecast we noted that strong bullish pressure due to market developments. The positive German economic data and quantitative easing plans by the US Federal Reserve were among the developments to have created a risk taking sentiment. Areas of concern remained such as Greek continued loan disbursement and Spanish debt woes. Caution was advised.
Looking at the EUR/USD chart above we note that the currency pair failed to test the 1.32 line. Having said so i always mention that support and resistance lines are never a single pip and hence this sometimes happens.
SMA 20 = Bullish
SMA 50 = Bullish
Both SMAs remain bullish and the SMA 20 is crossing over the SMA 200. SMA 200 is often an indicator of possible long term trends. The currency pair has since drifted lower and is now struggling at the 1.3 region. If this region fails, we may see 1.28 next where the SMA 200 will probably function as a support too.
There are rumours of a Spanish bailout in the works. I LOVE IT WHEN MY CAUTION WORKS! Being one of the larger economies of the Euro Zone, any possible hiccups will probably cause apprehension to surface. The US unemployment claims rose too and this serves as a reminder to traders that the employment market remains fragile.
In a development over the weekend, the German Chancellor and French president were seen committing to work together to solve the Euro Zone’s woes. Mentions of closer cooperation and integration were made but it was reported that this fell short during a press conference. When questions were made about a proposed banking union, the French president was reported to have said the earlier the better while the German Chancellor was reported saying that if something doesn’t work, there is no point to rush into it. Dear readers, the markets do not like to see differences among leaders of major economies and hence this may not strike a chord well with the sentiments.
Current sentiments seem to be swinging low and risk aversion appears to be encroaching. Monitor developments closely. Adverse events may further dampen outlook while on the other hand, positive developments may push back the encroaching negativity.
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