Good day forex traders.
Welcome to our weekly review of the EUR/USD.
In the previous EUR/USD review we noted that the currency pair was pushed below 1.2. Based on the bollinger bands, we might be seeing some bearish pressure.
A closer look reveals a possible phase of consolidation. I have indicated the region with yellow.
The longer the currency pair remains below 1.2, the higher the possibility of a bearish return.
In a BBC report, it was mentioned that the euro zone is picking up in business activities according to a survey “
Business activity during September saw one of its strongest gains for the past six years, the survey indicated.
The “flash” PMI reading for September – which is based on about 85% of replies to the survey – rose to 56.7 from August’s reading of 55.7. A reading above 50 indicates growth.
The manufacturing sector saw the biggest rise in employment in more than two decades, IHS Markit said, adding that the signs were that the next quarter would register strong manufacturing growth as well.
The survey also found that the pick-up in business activity had been accompanied by rising price pressures, with input cost and selling price inflation accelerating for the second month in a row.
It pointed out that the rise in business activity and inflationary pressures would fuel expectations the European Central Bank will, as has long been awaited, start to rein in its asset purchase programme.
The ECB is currently buying 60bn euros (£55bn) of bonds a month as part of its quantitative easing programme.
Earlier this month, the ECB raised its eurozone economic growth forecast for this year to 2.2%, the fastest in 10 years and hinted it could start trimming asset purchases next month. “
Many investors are speculating a reduction of the ECB involvement in easing measures. This may increase the demand of the euro currency due to the anticipation of an interest rate hike.
The week ahead is a busy one. We have speeches due from both the ECB president and US Federal Reserve chairperson. Any unexpected development may increase volatility. Do practice proper money management.
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