In the previous AUD/USD weekly forecast, we saw a significant dip across various strong sentiment and technical regions. This was indicative of a massive influx of bearish sentiment. A bullish recovery would probably see the currency pair face resistance at the strong sentiment and technical region of 0.6.

In the previous EUR/USD weekly forecast, we saw a similar bearish momentum that drove the currency pair beneath the strong sentiment and technical region of 1.1 and 1.08. In the event of a bullish recovery, the strong sentiment and technical region of 1.08 would likely function as a resistance. The lower bollinger band was also in the region and might add provide resistive influence to the price action.

Technical Analysis

aud usd weekly forecast

Looking at the AUD/USD weekly chart above, we see a bullish recovery. This is not unexpected, especially after extended stretches of price action. The currency pair broke through the resistance of 0.6 and tested the strong sentiment and technical region of 0.62.

As the bollinger bands continue to exert influence to regain equilibrium, we may see further upside pressure. If indeed the 0.62 region will likely be the immediate resistance, followed by 0.63 and 0.64.

A return of bearish pressure will probably face support at the lower bollinger band / 0.61, followed by 0.6.

eur usd weekly forecast

Looking at the EUR/USD weekly chart above, we see a similar bullish recovery for the currency pair. It has managed to recover most of the lost ground from the previous week and this suggests that the previous week was indeed sentiment driven as per mentioned.

The EUR/USD is back in it’s consolidation channel (circled) between 1.10 and 1.12 which dates back to Jun 2019.

In the upcoming week, a continuation of the bullish recovery will likely encounter resistance at 1.12 and the upper bollinger band. If the price action remains volatile, we may see a push towards 1.14.

A return of bearish pressure will probably see the EUR/USD face supports at 1.11, the middle bollinger band and 1.1. Similarly if the price action continues to clock an extended range, we may see a test on 1.09 and the strong sentiment and technical region of 1.08.

Fundamental Analysis

COVID-19 Coronavirus Crisis Continues

The COVID-19 coronavirus continues to spread globally. It is now present in many countries.

Italy has more than 80000 confirmed cases and over 9000 deaths. The situation in Spain has escalated and there are now more than 60000 confirmed cases and over 4000 deaths. Germany, the major economic power of the Euro Zone has almost 50000 confirmed cases. These figures likely added depressive sentiment towards the euro currency as investors are apprehensive about the containment efforts. Having said so, from a forex sentiment point of view, we need to see this in a comparative relationship with the US.

The situation in the US is rapidly escalating. It now has over 80000 confirmed cases and over 1000 deaths. Now that lock down measures of various kinds are been implemented throughout the US, economic sentiment towards the US is turning bearish. A number of analysts are of the opinion that the US is not well prepared to weather this crisis and that devastating consequences will emerge. With the mention of the US being the new pandemic epic center by the media, negative sentiment towards the US dollar is probably flooding the market.

Oil Price Impact On Australian Dollar Remains

The price of oil remains depressed as a result of the fall in demand and the oil price war between Saudi Arabia and Russia. As Australia is a commodities based economy, the under performance of oil will likely continue to add downside pressure for the Australian economy and by extension the Australian currency.

Quantitative Easing Continues

In a bid to stamp out the equities rout, the US Federal Reserve had announced it’s commitment to provide unlimited support. While this may help soften the economic impact, the ample supply of US dollars will inevitably result in some bearish pressure. This is likely one of the contributing factor for the weakening of the US dollar for the week.

US Unemployment Claims Shocked

The US Unemployment Claims was reported to be significantly worse than estimates. It came out to be 3283k instead of 1648k. This is almost double the forecast. Employment is a fundamental component of the economy as it leads to consumer spending and hence retail sales. A high unemployment rate is an indicator of an economy in distress. With more than 3 million of unemployment claims, negative sentiment towards the US economy probably increased.

US Non-Farm Payroll Anticipation

In relation to the dismay US Unemployment Claims and the existing negative forecast for the US Non-Farm Payroll (a loss of 81k jobs from a gain of 273k) and US Unemployment Rate (increase to 3.8% from 3.5%), the upcoming release will likely be highly scrutinized. Any significant difference of the data from expectations will likely trigger volatility as the market reacts to the surprise.

Shifting Sentiments

In our premium analysis, we track the ratio of long versus short positions in the forex market. The number of USD short positions are increasing. From a contrarian point of view, this may suggest a beginning shift from bearish to bullish bias in the EUR/USD and AUD/USD. It is too early to tell and hence members do log in to your dashboard and view the figures on an ongoing basis.

The Week Ahead

We need to monitor the COVID-19 coronavirus crisis closely. If the condition deteriorates or the economic stopgap measures increase, we may see increased volatility which may result in fickle sentiments. This increases the risk and challenge of forex trading as price action may change in an instant. It will be prudent to drop down to shorter time frames to assess the immediate price action as part of your forex planning.

There are a number of important economic releases and events for the US and Australia next week while the Euro Zone will be light on such. Any results that may lend weight to the current apprehension may further add to the sentiment, increasing the intensity of it. You can find a number of them listed below. ( Not in chronological order )

USA Chicago 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.

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.

AUS Monetary Policy 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 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 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
USA Unemployment Claims
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

The Bottom Line

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, Brent Oil and Price Action Bias Signals analysis.

Invest in yourself and get premium analysis for less than 20 cents a day. Our signature knowledge based approach will help you understand the markets better.

It is important to conduct defensive forex trading ( proper money management, realistic stop loss and take profits, etc ) as sentiments may shift in an instant from unexpected developments, resulting in a corresponding shift in price action.

Traders should always practice proper money management and seek to understand the underlying tones for the market. May the pips be with you!