Good day forex traders and readers.
Welcome to another weekly EUR/USD forecast and I hope you are having a great weekend. A few readers wrote to me saying that they were caught with that bullish spike. A lost of money always sad and I hope everyone will have a better forex trading week ahead.
In the previous EUR/USD forecast we noted that a strong support laid right below the currency pair. The EUR/USD was receiving bearish pressure due to the US Federal Reserve chairman Ben Bernanke suggestion of the possibility of tapering quantitative easing. The accommodative stance of the European Central Bank also added on.
Looking at the EUR/USD daily chart above we note that the currency pair did hit a support and climbed right up over a few resistances to test 1.32. This means that the weekly bollinger band support that I mentioned remains.
As the currency pair eases back down, we will need to monitor 1.3 closely to see if the bearish pressure would still be sufficient to push the EUR/USD down. I expect the middle bollinger band on the daily chart to offer some support.
We noted that Ben Bernanke of the US Federal Reserve did an u-turn of sorts on his suggestion of the possibility of tapering quantitative easing. He commented that inflation and employment markets indicated that more US Federal Reserve stimulus is needed and the outlook contains significant risks that require monitoring. He also mentioned that the Fed would not raise the interest rate until the unemployment rate drops well below 6.5%. The markets probably interpreted this as an indication that tapering would not happen in the near future. Furthermore the FOMC meeting minutes also indicated that a number of the US Federal Reserve officials believed that more should be expected from the economic progress before tapering should be considered.
With the apprehension of quantitative easing tapering gone for now, the markets seem to be undoing some of the moves of the past few weeks. Equities are higher, gold has gained in value and higher yielding currencies have generally gained in value although there are exceptions such as the Australian dollar.
The upcoming week brings us a number of important economic releases such as the US retail sales and German ZEW Economic Sentiment. We need to pay attention and monitor so as to keep track on sentiments.
Refer to the weekly pivot data for the EUR/USD below for some possible indications of support and resistance.
R3 1.3276 R2 1.3177 R1 1.3004 PP 1.2905 S1 1.2732 S2 1.2633 S3 1.2460