Good day forex traders and readers.
Welcome to our weekly forex forecast of the AUD/USD and EUR/USD. Time flies and soon it will be June! It seems like not long ago when we celebrated new year. Are you on track to a profitable 2014 for your forex trading?
In the previous forecast we noted that the Australian economy had stronger than expected numbers. As far as the EUR/USD was concerned, the dovish stance taken by the European Central Bank would probably cause a drag on the currency pair.
Looking at the AUD/USD weekly chart above we note that the currency pair is testing the middle bollinger band. We may expect supportive influence here.
An interesting observation here is a possible double top formation. If indeed, we may have more bearish pressure ahead.
Looking at the EUR/USD weekly chart above we note that the currency pair has breached the middle bollinger band. This suggests that more bearish pressure may surface to take the currency pair to the bottom bollinger band.
The chart is also telling us that the EUR/USD has been bearish for 3 weeks now. Indeed an indication of the strong bearish pressure.
It was reported that investors are increasingly of the belief that an interest rate hike by the Reserve Bank of Australia is unlikely for the time being. Correspondingly, demand for the Aussie dollar dropped and hence the bearish close for the week.
The EUR/USD also continues to face bearish pressure due to the dovish stance taken by the European Central Bank. Earlier the ECB indicated on the possibility of stimulus action come June. Investors fear of an interest rate cut and hence demand for the euro currency fell. It is possible that the EUR/USD may continue to face bearish pressure until the ECB meeting in June sheds light on the speculations.
The ECB president is due to speak on a number of days this week and hence do be careful of any unexpected developments.