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EUR/USD AUD/USD Weekly Forecast 25 Nov 19

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In the previous AUD/USD forecast we noted that the currency pair was bearish for the week. As expected it tested the 0.68 region but failed to establish a foothold below 0.68.

Another bearish attempt to head south would likely face support at 0.68 before an attempt to take the support of 0.67.

In the previous EUR/USD forecast we noted that that the currency pair was bullish for the week. While the currency pair did test the strong sentiment and technical region of 1.1, bullish pressure lifted the EUR/USD back above.

The EUR/USD would likely face immediate support at 1.1 and the extended bearish target might be the lower bollinger band.

Technical Analysis

Looking at the AUD/USD weekly chart above we note that the currency pair was bearish for the week. While it managed to break and hold below 0.68, the limited extent indicate the possibility of some push back.

The Price Action Bias Signals for the AUD/USD was spot on. It gave a signal of slight bearish bias and indeed the currency pair was slightly bearish. Congratulations to all members who managed to grab the opportunity! A gentle reminder that nothing in forex is 100% and hence always plan for unexpected developments. The new Price Action Bias Signals for the upcoming week is now available in your dashboard.

If the bearish momentum continues in the upcoming week, we may see an attempt to reach the previous low. We also need to be mindful that the lower bollinger band is in the vicinity and it may act as a support.

A return of bullish push will likely see a test on 0.68 and the middle bollinger band, followed by the recent high.

Looking at the EUR/USD weekly chart above we note that the currency pair was bearish for the week. As expected, the currency pair faced support at 1.1 and failed to breach the important sentiment and technical region.

If bearish momentum continues, a clear break below 1.1 will set the stage for a possible support at the lower bollinger band. It is important to note that the lower bollinger band is in the vicinity of the previous low and hence the supports may receive some synergy.

Should a bullish recovery occur, the middle bollinger band and 1.12 are likely to exert influence.

US China Trade Negotiation Woes

The optimistic stance had since deteriorated to a more guarded situation. The passing of the Hong Kong Human Rights and Democracy Act has angered China.  It’s official had commented that “China will have to take strong countermeasures to defend our national sovereignty”.

Risk appetite was probably dampened due to the uncertainty, leading to the demand for “safe” assets such as the US dollar. This is likely to affect the Australian economy due to the significance of China as a trade partner.

New European Central Bank President

The new President of the European Central Bank Christine Lagarde called for greater participation from the member governments in her first policy speech. A number of analysts found the call lacking compared to her predecessor and that it failed to impress.

The question remains if the European Central Bank can effectively lead the euro economy out of the current sticky situation. As the Euro Zone is made up of member economies that are unique and in various level of development, it will require much effort to synergize.

Reserve Bank of Australia Remains Accommodative

The latest RBA meeting minutes gave insight into the central bank’s view of the situation. It reported that “members reviewed the case for a further reduction at the present meeting”. The anticipation of a future interest rate cut likely added negative sentiment towards the currency pair, resulting in bearish pressure as investors usually seek currencies with higher interest rates.

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 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.

AUS RBA Deputy Gov Debelle Speech
AUS RBA Gov Lowe 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.

USA CB Consumer Confidence
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.

USA Richmond 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.

AUS Construction Work Done
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.

USA Core Durable Goods Orders
USA 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.

USA Preliminary 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 Chicago 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.

USA Core PCE Price Index
While the Personal Consumption Expenditures index is similar to Consumer Price Index, 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.

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 Private Capital Expenditure
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.

EUR German Preliminary CPI
EUR CPI Flash Estimate

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.

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.

If you can spare 20 cents a day, premium membership awaits. Gain access to premium analysis such as Major Currency Pairs and our proprietary Price Action Bias Signals! With a 10 days no question asked refund guarantee, sign up with a peace of mind now.

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

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