Technical Analysis

Looking at the EUR/USD weekly chart above we note that the currency pair climbed for the week. It tested the upper bollinger band as expected.

A continuation of the current region will likely establish a new channel between 1.1 to 1.14.

From a technical point of view, a bullish momentum has yet to be established.

Fundamental Analysis

The US Federal Reserve adopted a dovish stance in the recent FOMC event. Interest rate hikes will not happen as fast as anticipated. A number of traders were disappointed. Expectation was that the pace of interest rate hikes would continue. With this change in sentiment, likewise we saw a retreat of demand for the US dollar.

I always mentioned that the higher a currency’s interest rate is versus another, the more likely will it be of higher value. The reverse will likely dampen value.

There is increasing consensus that the worst of the oil slump is over. It will be prudent to monitor this. Should the global economy move ahead, we are likely to see demand for riskier assets and currencies.

In the week ahead, continue to pay close attention to economic releases. Crucial data like the German ZEW economic sentiment and US unemployment claims is expected in the upcoming week.

Trade safely.