Good day dear readers.
I hope the weekend is fine for you so far. It is a busy one for me. Sometimes I just wish that weekends last longer! 3 days instead of 2 will be a good start. Ha!
In the previous AUD/USD forecast and EUR/USD forecast we noted volatility due to the holiday season. From the fundamental perspective, the US Non-Farm Payroll was quite on track although the unemployment rate went up. There was a sentiment of calm regarding the Euro Zone. Equities were mostly green and the Australian equity index suggests an economy continuing to grow.
Looking at the AUD/USD chart above we note that the currency pair was making consistent bullish gains for most of the week. Towards the end of the trading week we noted a bullish spike followed by a reversal. This might be profit taking and being a region of resistance, we may see more testing. Any bearish correction may see 1.0440 next.
Looking at the EUR/USD chart above we note that the currency pair made a bullish push towards the end of week. In this instance we can see clearly the advantage of diversifying our investments. The AUD/USD failed to hold on to the gains while the EUR/USD did. 1.34 is usually a strong resistance and hence bullish traders will need to monitor closely.
Economic data continues to suggest strong momentum for the Euro Zone and Australia. On the contrary with the recent US fiscal cliff event, the US continues to be plagued by weak economic data. Unemployment claims increased and job cuts by a few big names was announced. Recently a number of expert analysts mentioned that they believed the markets are back to an era where movement is dictated more by long term fundamentals rather than short term sentiments. We may be seeing signs of it in the form of such like the AUD/USD and EUR/USD divergence which I mentioned some time back. If indeed so, I definitely welcome it as sentiments are hard to guess while fundamentals can be monitored through long term trends and market movements such as equities.
An bullish stance by the European Central Bank president on the positive outlook of the Euro Zone probably added push to the bullish momentum towards the end of the week.
On an ending note, I want to caution all that sentiments may always strike back and furthermore the Euro Zone remains far from the light at the end of the tunnel.