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EUR/USD AUD/USD Weekly Forecast 23 Dec 19

In the previous AUD/USD weekly forecast, we noted another week of bullish momentum. As per our expectations, it tested the upper bollinger band and the 0.69 region. We were aware of the straightening bollinger bands and hence mindful of a possible technical squeeze downstream.

Should bullish momentum continues, it would go face on with the upper bollinger band and 0.69.

In the previous EUR/USD weekly forecast, we noted another week of bullish momentum that tested the upper bollinger band and 1.12 region as expected. The subsequent easing of the currency pair back towards 1.11 suggested that the price action might had been sentiment driven.

A bearish recovery would probably hit resistance at the 1.11 and middle bollinger band region.

Technical Analysis

Looking at the AUD/USD weekly chart above, we see yet another bullish weak. As per our forecast, it tested the upper bollinger band and 0.69 region. It is important to note that unlike the previous week, the currency pair did not ease much from the bullish attempt. It remains at the 0.69 region, suggesting bullish pressure.

In the week ahead, it is crucial to monitor closely for insights as to the price action of the AUD/USD. A bullish beachhead above 0.69 will provide much needed space for the approach  towards the strong sentiment and technical region of 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 and 0.67 region will likely function as a support too.

Looking at the EUR/USD weekly chart above, we note the fizzling of the bullish price action.  As expected, it tested the 1.11 region and the middle bollinger band. While the closure of the currency pair below 1.11 indicates bearish sentiment, the middle bollinger band remains intact. It is likely to exert supportive influence.

In the upcoming week, the reaction of the EUR/USD towards the middle bollinger band may set the tone of the week.

Should the bearish momentum continue to build in the week ahead, it is likely that an attempt will be made to reach 1.1. A bullish recovery will probably hit resistance at the 1.11 before heading towards the strong sentiment and technical region of 1.12.

Australian Employment Numbers Greens

The latest employment change and unemployment rate came out better than expected. Instead of 14.5k, employment change recorded a much better 39.9k increase. The unemployment rate is pushed down further to 5.2% instead of the expected 5.3%.

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. This release likely brought much needed positive sentiment and probably resulted in the currency pair’s resilient performance this week.

German Economic Woes

In our midweek update, we noted that the German Ifo Business Climate was better then expected, reporting 96.3 instead of 95.6. Having said so we went beyond the surface numbers and explained that the apparent lack of positive momentum for the euro currency was likely due to the wider situation of the German Ifo Business Climate. A closer inspection of the statistics would reveal that while the release was positive, the current level is still far off from the high of 117.6 back in 2018.

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. This current German situation and figures such as the lower than expected German Flash Manufacturing PMI likely led to the overall bearish performance of the EUR/USD for the week.

The Week Ahead

In view of the Christmas holidays, next week is shaping out to be light on economic data. As the forex trading volume is likely to be light, it is critical to conduct defensive forex trading ( proper money management, realistic stop loss and take profits, etc ) as the low liquidity may amplify price action and result in inproportionate momentum.

USD Core Durable Goods Orders
USD Durable Goods Orders
Reports on the orders of goods are leading indicators of production and thus the level of economic activities. Increasing purchase orders suggests that manufacturers will increase activity to meet the demand, providing downstream benefits such as employment. On the other hand, decreasing orders may indicate an upcoming economic crunch.

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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