Good day forex traders and readers.
Welcome to another weekly forex forecast where we review and learn from the markets. It was a busy week for me and it is only going to get busier! Ha. So where is my million from forex now? :p
In the previous AUD/USD forecast we noted that the officials of the Reserve Bank of Australia gave somewhat neutral views toward the possibility of an interest rate cut. Weak US data towards the week of the gave back some losses as investors speculate that it would reduce the possibility of a US Federal Reserve tapering of the US quantitative easing activities. The middle bollinger remained as a likely resistance.
In the previous EUR/USD forecast we noted that the currency pair remains capped by 1.34. Any bullish momentum would need to overcome it and the middle bollinger band remained as an immediate support. The weak US data also brought some gains for reasons similar to the AUD/USD .
Looking at the AUD/USD daily chart above we note that the currency pair did test the middle bollinger band as an attempt to push for greater heights. Nonetheless it failed and it had since crashed towards the previous low of 0.8880. Do remember that support and resistance levels are never a single pip.
Should this strong support fail, we may be looking at further bearish momentum.
Looking at the EUR/USD daily chart above we note that the currency pair did test the middle bollinger band too. However this immediate support soon gave way to the bearish momentum and the currency pair dipped towards the strong support of 1.3200.
Should this strong support fail, we may be looking at an extended bearish target of 1.3000.
While the Australian economy data was pretty much uneventful, the US and the Euro Zone both posted spectacular releases. The US reported a quarter GDP of 2.5% annualized which was much better than expected. This gave investors and traders the idea of a strengthening US economy. However as I always mentioned here, the current market theme is one of fear of the tapering of quantitative easing by the US Federal Reserve. This positive report would probably give the US Federal Reserve officials another pro tapering factor during their considerations and hence investors and traders are having risk aversion, seeking the US dollar as a safe haven. This could be observed in the later part of the week across both the AUD/USD and EUR/USD where the US gained in value.
The Euro Zone reported an increase in consumer confidence and the German IFO Business Climate. Better sentiments often suggest an underlying economic positivity and hence this probably recovered some losses for the Euro currency as seen towards the last part of the week.
Numerous important economic releases are due next week including the US Non-Farm Payroll. Pay particular attention to the sentiments regarding the US Federal Reserve tapering of the quantitative easing. This will probably have a high impact on the market.