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EUR/USD AUD/USD Weekly Forecast 18 Mar 19

The week was not a good one for the US dollar. All except one of the currency pairs we track had the US dollar weakening. In the previous forecast, we noted that both the AUD/USD and EUR/USD were facing strong supports ahead. This was inline with our Price Action Bias Signals where the EUR/USD went from a slightly bearish bias to neutral.
Headwinds generated by the slowing Chinese economy probably added drag to both currency pairs. Australian GDP and retail sales numbers were worst than expected and the European Central Bank is set to launch new monetary stimulus.

AUD/USD Technical Analysis

Looking at the AUD/USD weekly chart, we note that the week was bullish for the currency pair. As mentioned last week, the strong support of 0.7 held indeed. Having said so, it is interesting to note that there had been 3 attempts to breach 0.7. There is likely an underlying downside sentiment. If this continues on, the bullish support may falter as buy positions get taken up leaving fewer supports. The week ahead will be crucial and we need to monitor if the AUD/USD’s bullish recovery is sustainable.

EUR/USD Technical Analysis

Looking at the EUR/USD weekly chart above, we observe a similar situation whereby the downside pressure failed to establish a foothold against the strong support of 1.12. While the bullish recovery was notable, we have to see if the currency pair maintains the momentum as ahead lies the resistance of the middle bollinger band and 1.14.

An important point to note is that the currency pair is generally trending lower since last year. Long time readers will know that price action in the short term are usually sentimental in nature while fundamentals usually play out over a long period of time. This is the reason why we use weekly chart for our main forecasts. Sentiments can change and flip in an instant!

US Fuels Risk Appetite

Both the US Core Retail Sales and US Retail Sales were better than expected. It came in at 0.9% and 0.2% instead of the forecasted 0.4% and 0%. This was much welcomed verus the previous reports which were red. As a fundamental indicator of economic health, this positive result would have led to upside sentiments.

China New Foreign Investment Law

On the final day of the National People’s Congress, a new law was passed that aims to enable a more equal playing field between domestic and foreign businesses. This may be seen as a positive development for the US China trade war. If this sparks a chain of positive sentiments, we may see further improvement in the markets in terms of risk appetite.

Important Week Ahead

The week ahead will bring many important economic events and releases.

For the Australian Dollar we have RBA Assistant Governor Kent and Bullock due to speak. The Monetary Policy Meeting Minutes and House Price Index are scheduled for release. We are also expecting the Australian employment figures to be released too.

For the Euro currency, we have the German ZEW Economic Sentiment and numerous Services and Manufacturing Purchasing Managers’ Indexes. The EU Economic Summit is happening towards the end of the week.

For the US Dollar, we have the FOMC Statement, Federal Funds Rate and FOMC Press Conference. The Philadelphia Fed Business Outlook Survey will be released too.

Besides the above, there are numerous other releases and events. Proper money management is critical as any unexpected development may trigger volatility. For example, interest rates and employment data are vital economic pillars. It is good to follow an economic calendar. Members can log into their dashboards for the economic calendar, latest analysis and updated Price Action Bias Signals for the week ahead.

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