Good day forex traders.
Welcome to our weekly review of the EUR/USD currency pair.
In the previous EUR/USD forecast we noted that 1.22 would be a possibility if bullish momentum continued. US job wages are not growing as fast as expected and there is concern that it indicates an underlying weakness. Wages ultimately drive consumption which translate into the economy.
Looking at the EUR/USD weekly chart above we observe that the 1.22 bullish target was achieved. The currency pair appears to want to return back to the previous bullish channel but it remains too early to be certain.
The political situation over at the biggest economy of the Eurozone continues to present a risk to traders riding on the Euro’s bullish flight. Bloomberg reports”
The euro’s bull run may face a hiccup should Germany’s leaders fail to break a four-month political impasse that has left Europe’s largest economy without a majority government.
The common currency could fall as low as $1.17, a level not touched since mid-November, should the Social Democratic Party decide not to pursue a coalition with Chancellor Angela Merkel, according to Morgan Stanley. The SPD is holding a special convention on Sunday to decide whether to pursue formal talks with Merkel’s Christian Democratic Union-led bloc.
Any euro move fueled by the outcome of the SPD meeting would kick off what looks to be a busy week for the currency, with the European Central Bank’s first policy decision of the year due Thursday. ”
The upcoming European Central Bank minimum bid rate decision will likely be monitored closely as analysts attempt to decipher the extent of stimulus withdrawal if any. A tightening environment may add buillish pressure. Trade safely.
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