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EUR/USD AUD/USD Weekly Forecast 3 Feb 20

In the previous AUD/USD weekly forecast, we noted that the currency pair was bearish for the 4th week in a row. It broke through the middle bollinger band and was approaching the strong sentiment and technical region of 0.68. A break of the 0.68 support would open up the path to the lower bollinger band.

In the previous EUR/USD weekly forecast, we noted a bearish week for the fourth time in a row too. A bullish recovery would need to take down the middle bollinger band and 1.11 before heading to 1.12 which is also a strong sentiment and technical region.

Technical Analysis

Looking at the AUD/USD weekly chart above, we see yet another bearish week for the currency pair.

As expected, the AUD/USD dipped and tested the lower bollinger band. It is now at the region of the current bearish momentum’s previous low.

If the bearish momentum continues beyond the current support, 0.66 will likely be a significant challenge.

A bullish recovery will likely see resistance near the 0.67, 0.68 and middle bollinger band regions.

Looking at the EUR/USD weekly chart above, we observe a bullish recovery. It is currently testing the 1.11 resistance.

With the EUR/USD now back in the middle of the bollinger band, we question the continuity of the bearish momentum.

Any upside price action will likely face resistance at the strong sentiment and technical region of 1.12.

A return of the bearish momentum will need to overcome the strong sentiment and technical region of 1.1, followed by the lower bollinger band.

Australian Economic Challenge

The Wuhan coronavirus crisis is taking its toil on the Chinese economy and as the country prepares to implement economic support, the Australian economy is apprehensive towards the future.

In the AUD/USD daily chart above, we see the bearish sentiment that had swamped the week. As China is a major economic partner of Australia, this is not unexpected.

Gold Creeps Higher

Gold has risen in value compared to last week and this suggests significant risk aversion as gold is often an asset of choice during times of risk aversion. As countries around the world work to limit the virus outbreak, economies will likely be affected.

Possible US Interest Rate Cut

There are speculations of a possible interest rate cut by the US Federal Reserve in the upcoming months. A number of analysts are of the opinion that the current virus crisis may further test the US economy, resulting in an increased possibility of an interest rate cut. These sentiments likely weakened the US dollar.

The Week Ahead

We need to monitor the Wuhan coronavirus crisis closely. If the condition deteriorates, sentiments may be further affected.

There are also many important economic releases and events due next week. You can find a number of them listed below. ( Not in chronological order )

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.

AUS RBA Gov Lowe Speech
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.

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 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
Monetary policy statements are given much attention by analysts and investors as it has an impact on the economy. The minutes will be analysed thoroughly for insights on the economic policy ahead. Significant volatility may be generated if there are unexpected revelations.

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.

EUR EU Economic Forecasts
Economic forecasts are important and monitored by traders and analysts. The idea is to obtain insights to possible future economic polices and conditions. Volatility may increase, especially when the actual data is not as per expectations.

AUS RBA Monetary Policy Statement
Monetary policy meeting minutes are given much attention by analysts and investors as it has an impact on the economy. The minutes will be analysed thoroughly for insights on the economic policy ahead. Significant volatility may be generated if there are unexpected revelations.

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
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.

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

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.

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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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