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EUR/USD AUD/USD Weekly Forecast 30 Dec 19

In the previous AUD/USD weekly forecast, the currency pair had a bullish week. It tested the upper bollinger band and 0.69 region. Unlike the week before, the AUD/USD did not ease much from the bullish attempt. It remained at the 0.69 region and was indicative of bullish pressure.

In the previous EUR/USD weekly forecast, we observed a bearish week for the currency pair. As expected, it tested the 1.11 region and the middle bollinger band. A bullish recovery would probably hit resistance at the 1.11 before heading towards the strong sentiment and technical region of 1.12.

Technical Analysis

Looking at the AUD/USD weekly chart above, we observe a climb towards the strong sentiment and technical region of 0.7. We have been commenting on the possibility of a technical squeeze for sometime now and hence congratulations to all readers who were positioned to take advantage of the situation. ( Thanks for the emails you sent about the success. We are happy to celebrate the joy with you! )

The currency pair has stretched beyond the upper bollinger band and hence we are expecting some pull back influence there. The 0.7 region is also likely to produce significant resistance. A continuation of the bullish momentum can only happen if 0.7 is  clearly breached.

A return of bearish pressure will likely face support around the region of the upper bollinger band and 0.69. Beyond that lies the middle bollinger band and 0.68.

Looking at the EUR/USD weekly chart above, we observe a test on the strong sentiment and technical region of 1.12. As both the upper bollinger band and 1.12 are in the vicinity, the resistive influence is probably significant.

In the upcoming week if bullish momentum continues, we will need to monitor the shorter time frames to see if the price action is strong enough to stage a challenge on the 1.12 resistance. Beyond 1.12, the region of 1.13 will likely function as a resistance.

If a bearish recovery returns, 1.11 and the middle bollinger band will likely function as supports.

US China Trade Deal Optimism

Early in the week, it was reported that the US President Donald Trump commented of a phase one deal to be signed between him and the Chinese President Xi Jinping. While China has not confirmed if the two leaders are to meet, it was mentioned that both sides were working closely on the legalities and translation.

Investors are sensitive to geo political developments as there may be a significant impact on the country’s economy and currency. This development likely resulted in an improvement of risk appetite and hence an increase in demand for riskier assets. This is probably significant for the Australian dollar in particular as China is an important economic partner.

Financial Markets Rally

Many financial markets across the world were rallying as a result of the US China trade development, likely resulting in a positive feedback loop for the risk appetite. This probably weighted on the US dollar.

The Week Ahead

In view of the New Year 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.

USA Chicago PMI
USA ISM 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.

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 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.

USA FOMC Meeting Minutes
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 FOMC Member Kaplan Speaks
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.

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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