EUR/USD Forecast 3 September 12


 

Good day forex traders.

How was your previous trading week? I hope you made some pips. Even if you do not, take it as a learning experience. What when wrong, how could you have prevented it and how would you handle it in the future!

In the previous EUR/USD forecast we noted that the EUR/USD fulfilled our technical analysis. The triangle squeeze breakout did happen and the extended bullish target of 1.26 came within pips. It was a happy occasion for the forex koalas. Greece was reported to be requesting for an extension of terms regarding the bailout agreement. While Germany appeared to be open to the idea, nothing concrete was decided. There were speculations of possible stimulus for the US economy to be announced at the Jackson Hole event.

 

EUR/USD Chart

 

Technical Analysis

Looking at the EUR/USD daily chart above, we noted a failed attempt to breach the 1.26 resistance.

SMA 20 ( RED ) = Bullish

SMA 50 ( BLUE ) = Flat

The SMAs remained unaligned and this suggests a lack of sustained momentum. The EUR/USD remains in a  bullish channel and a breach of 1.26 will open up the upper trend line resistance of around 1.27. Any bearish correction will have the currency pair facing the double support region of 1.24 / 1.245.

 

Fundamental Analysis

Other than the woes of Greece, i am beginning to notice increase media coverage of the budget deficit problems of Spain. This may be an issue as i always mention that the markets are ultimately driven by the participants expectations. ie. sentiments. If Spain gains enough negative publicity, a negative spiral of sentiments towards the country and by extension the Euro Zone will probably happen. It is a reality that the Euro Zone budget deficit crisis has not seen the light at the end of the tunnel. In fact as per the polls at the home page of our website, many of you believe that the Euro Zone budget deficit crisis will only end 2015 and beyond. Pressing issues include an increasing unemployment rate which is usually good measure of economic health.

As speculated, the chairman of the US Federal Reserve Ben Bernanke indicated that he is open to another round of bond purchases in an attempt to push up the economic growth. The unemployment rate is unacceptable to him and he believes that it is a waste of human talent. Investors brought about a rally in the US equity market as possible stimulus goes favorably with them.

This coming week brings about the US Non-Farm Payroll. With the recent focus on unemployment, caution is advised on the possible outcome. There are also speculations of an interest rate cut by the ECB.

 

Trade Safely.

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