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EUR/USD AUD/USD Weekly Forecast 16 Dec 19

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In the previous AUD/USD weekly forecast, we noted that the currency pair was bullish. As expected, the gradual straightening of the bollinger bands foretold a bigger surprise in the form of an upside spike. In the week ahead, we would see the upper bollinger band and 0.69 function as resistance.

In the previous EUR/USD weekly forecast, we noted that the currency pair was bullish for the week. The strong sentiment and technical region of 1.1 held and resulted in an upside push. In the week ahead, a continuation of the bullish momentum would require it to overcome the middle bollinger band before heading for 1.11 / 1.12.

Technical Analysis

Looking at the AUD/USD weekly chart above, we see another bullish weak with the currency pair reaching above the previous high. As expected, it tested the upper bollinger band and 0.69 region.

The bollinger bands maintain a straightening outlook and if this continues, we may experience a technical squeeze breakout down the road.

In the week ahead, a continuation of bullish momentum will need to take out both the upper bollinger band and 0.69 before an attempt to test 0.7.

A bearish recovery will likely face strong support at the lower bollinger band and 0.68 region. Beyond that, the lower bollinger band may function as a support too.

Looking at the EUR/USD weekly chart above, we see another bullish weak with the currency pair reaching above the previous high. As expected, it tested the upper bollinger band and 1.12 region.

The notable easing of the currency pair back towards 1.11 suggests that the price action might had been sentiment driven.

Should the bullish momentum continue to build in the week ahead, it is likely that an attempt will be made to reach 1.12 again.

A bearish recovery will probably hit resistance at the 1.11 and middle bollinger band region before heading towards 1.1

Brexit Still Matters

Just when most of the markets have moved on about the ongoing Brexit tussles, it made a comeback in the form of a landslide victory for the Conservatives lead by Boris Johnson. This provides much clarity and certainty regarding the UK’s exit from the Euro Zone.

Investors are apprehensive towards geo-political complications and hence this development likely shedded much needed light on the path ahead. The demand for Euro surged and by extension other riskier assets such as the Australian Dollar too.

US China Trade Deal In Sight

It was reported that US and China had reached to an agreement on the terms of a “phase one” trade deal. This starts the path to recovery as one of a number of incremental agreements to resolve the trade war. It was also reported that the US President Donald Trump approved of the deal. It appeared that the US would postpone upcoming tariffs and also ease the existing ones.

Both the US and China are major economic players in the world stage and hence this development likely drove a knee jerk reaction in sentiments. Risk appetite probably spiked as traders felt that things were going to be better. This is especially so for Australia as China is a major economic partner.

ECB President Cautiously Optimistic

In her first interest rate event, President of the European Central Bank Christine Lagarde maintained a hold on interest rates. The general sentiment towards her approach was one of cautious optimism. This probably increased positive sentiment towards the Euro.

The Week Ahead

Many important economic releases and events are due next week. It is critical to conduct defensive forex trading ( proper money management, realistic stop loss and take profits, etc ) as sentiments may change in an instant from unexpected developments, resulting in a corresponding price action shift.

EUR French Flash Services PMI
EUR French Flash Manufacturing PMI
EUR German Flash Manufacturing PMI
EUR German Flash Services PMI
EUR Flash Manufacturing PMI
EUR Flash Services PMI
USA Flash Manufacturing PMI

Purchasing Managers’ Index is a survey of purchasing managers and is important as the sentiment of purchasing managers is a leading indicator of economic health. A healthy sentiment suggests that an economy is moving along well while a cautious sentiment may see less business activities due to prudence.

AUS Monetary Policy Meeting Minutes
Interest rate related statements are given much attention by analysts and investors as it has a direct impact on the currency. Investors usually favor a currency with a higher interest rate and will analyse these statements thoroughly for insights on the interest rate policy.

USA Building Permits
The construction of a building generates many economic activities. Jobs will be created for construction workers, the various sub contractors and services associated with new buildings such as power, water, furniture and so on.

EUR ECB President Lagarde Speech
Speeches may reveal new insights to economic policies or contain a question and answer segment that at times go into unscripted topics resulting in unexpected developments and volatility.

EUR German Ifo Business Climate
Business Climate surveys are influential as the sentiment of businesses is a leading indicator of economic health. A healthy sentiment suggests that an economy is moving along well while a cautious sentiment may see less business activities due to prudence.

USA Crude Oil Inventories
Movement of oil supply may bring insights to the level of general economic activities. For example, an increasing supply may suggest excessive production or diminishing demand. A reducing supply on the other hand may suggest an economic pick up.

AUS Employment Change
AUS Unemployment Rate

Employment is a fundamental component of the economy as it leads to consumer spending and hence retail sales. A low unemployment rate is an indicator of a healthy functioning economy.

USA Philly Fed Manufacturing Index
This survey of manufacturers is important as the sentiment of businesses is a leading indicator of economic health. A healthy sentiment suggests that an economy is moving along well and with the activities of the businesses, downstream benefits will happen such as employment and investment.

USA Final GDP
Gross domestic product is a measure of the monetary market value of all the goods and services produced. It is an overall measure of economic activity and health and thus wields influence on the home currency.

USA Core PCE Price Index
The Personal Consumption Expenditures index is similar to the Consumer Price Index but it focuses on individuals. It is a component of inflation and if inflation is high, a central bank may increase interest rate to mitigate the situation.

USA Personal Spending
While Personal Spending is similar to Retail Sales, it focuses on consumers. It is a fundamental component of the economy because as consumers spend, it translates to revenue and flows up stream as salaries, wholesales purchase, production orders and so on.

Following an economic calendar is vital so that your forex trading plan factors in the events. Members can log in to their dashboard for an economic calendar. The latest Major Currency Pairs, USD Index, Gold, Crude Oil and Price Action Bias Signals analysis are available too. Members can log in to their dashboards for the latest signals for the upcoming week.

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Traders should always practice proper money management and seek to understand the underlying tones for the market.

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