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EUR/USD AUD/USD Weekly Forecast 2 Dec 19

In the previous AUD/USD weekly forecast, we noted that the currency pair was bearish for the week. Should the bearish momentum continue, we might see an attempt to reach the previous low. We also need to be mindful that the lower bollinger band was in the vicinity and it might act as a support.

In the previous EUR/USD weekly forecast, we noted that the currency pair was bearish for the week. If the bearish momentum continued, a clear break below 1.1 would set the stage for a possible support at the lower bollinger band. It is important to note that the lower bollinger band was in the vicinity of the previous low and hence the supports might synergise.

Technical Analysis

Looking at the AUD/USD weekly chart above, we note that the currency pair is bearish for the week. It is below 0.68 but 0.67 is out of reach for now. The lower bollinger band is straightening, suggesting that actual downwards slide of the price is gradual for now.

In the upcoming week, a continuation of bearish momentum will need to decisively breach 0.67 before an attempt on the lower bollinger band and previous low.

A bullish recovery will face off against the support turned resistance region of 0.68. The middle bollinger band is just above the region and will likely add to the resistance.

Looking at the EUR/USD weekly chart above, we observe a slightly bearish week, ending almost a doji. As mentioned, there was no clean break below 1.1 and hence the currency pair ended above the region. Dojis suggest uncertainly as the currency pair struggles to find direction.

In the Price Action Bias Signals for the week, the EUR/USD received a Slightly Bearish signal. This was spot on and the initial dip likely gave members an opportunity of tens of pips. Congratulations to the members and the latest Price Action Bias Signals are now in your dashboards. A gentle reminder that nothing in forex is 100% and hence always practice proper money management.

If the bearish momentum continues, the attempt at 1.1 will repeat, Extended bearish push will likely go for the lower bollinger band followed by the previous low.

A bullish recovery faces the risk of a resistance at the middle bollinger band. There is also the possibility that the middle bollinger band and 1.11 region may synergise, putting up a stronger resistance.

Early Week Risk Aversion

In the first half of the week, we observed a risk averse sentiment. As per our forecast update, the Richmond Manufacturing Index was much worse than expected. Coming in at a -1 instead of 6, this indicates a deteriorating situation. This is a survey of manufacturers and gives insights into the sentiment of businesses which 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. The dismay result likely injected risk aversion into the market.

A Misleading Green

While the Australian Construction Work Done was much better than expected, clocking in at -0.4% instead of -1%, a closer look at the data will reveal the contraction since Nov 2018. This statistic tracks the value of construction work done and being a sizeable industry, it leads to insights on the level of economic activities. This will likely add to the general sentiment of an economy with significant downside risk.

German Preliminary CPI Bump

The German Preliminary CPI came in worse than expected. The initial forecast estimated a -0.7% but the actual release came out to be -0.8%. This has implications for the Euro Zone as Germany is a major member economy of the bloc. The Consumer Price Index is important because the price of consumer goods is a significant component of inflation. If inflation is high, a central bank may increase interest rate to mitigate the situation. Speculations of a possible interest rate hike may generate demand for the currency. On the other hand, depressive figures may lead to accommodative policies adopted by the central bank in a bid to spur healthy inflation.

Euro CPI Green For Now

While the German Preliminary CPI caused concern, the Euro Flash CPI came in better than expected. It came out at 1% instead of 0.8%. This likely brought a knee jerk reaction of relief and the euro inched towards the upside. We have to always be mindful that short term price action is often influenced by sentiments.

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 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.

AUS Building Approvals
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.

AUS Company Operating Profits
The earnings of businesses may provide insights into the state of the economy. For example dropping earnings suggest possible economic challenges.

EUR Spanish Manufacturing PMI
USA ISM Manufacturing PMI
USA ISM Non-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 Current Account
As a measure of money, a rising surplus suggests that the local currency is in demand by foreign traders.

AUS Cash Rate
A high interest usually generates demand while a low interest may result in the dumping of the currency for better yielding alternatives. Therefore the interest rate result usually has a significant impact, especially when it is an unexpected result.

AUS RBA Rate Statement
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.

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 ADP Non-Farm Employment Change
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.
ADP’s statistics is based on the payroll data of approximately 400,000 U.S. business clients. Therefore it is viewed by many as a possible early indication of the US Non-Farm Payroll result.

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 Retail Sales
Retail sales is a fundamental component of the economy. As consumers spend, it translates to revenue and flows up stream as salaries, wholesales purchase, production orders and so on.

AUS Trade Balance
Trade balance is a measurement on trade volume and net direction. Whether a country is net import or export is important. If more exportation is done, it is likely to be beneficial for the local currency as foreign companies usually buy with the local currency. This creates demand and adds bullish pressure.

USA Average Hourly Earnings
Consumer earnings is important due to it’s upstream impact. With more earnings comes possible increased consumer spending. This translates to revenues, leading to employment and business expansion.

USA Non-Farm Employment Change
The US Non-Farm Payroll is basically data released by the U.S. Bureau of Labor Statistics on a monthly basis that represents the total number of employed US workers, excluding the following employees:

– general government employees
– private household employees
– employees of nonprofit organizations which provide assistance to individuals
– farm employees

USA 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 Preliminary UoM Consumer Sentiment
Consumer surveys are influential as the sentiment of consumers is a leading indicator of economic health. A healthy sentiment suggests that an economy is moving along well and hence consumers are confident. This likely leads to increased retail sales. A cautious sentiment on the other hand may see consumers spend less in view of a perceived upcoming economic crisis.

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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