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EUR/USD AUD/USD Weekly Forecast 7 Oct 19

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In the previous weekly forecast, the AUD/USD was rather flat week. Price momentum remained insufficient to break beyond the influence of 0.68.

The week was bearish for the EUR/USD. While the currency pair attempted to test the lower bollinger band and 1.09 support, it failed to establish a foothold.

Markets were generally sentimental as the price action appeared to be influenced by the developments of the US China Trade War.

The US Personal Spending came out to be 0.1% instead of the expected 0.3%. The week also brought a flood of worse than expected economic releases for the euro. PMI surveys from Germany, France and the Euro Region as a whole were worse than expected. A rate cut from the Reserve Bank of Australia was expected in the upcoming week.

Technical Analysis

Looking at the AUD/USD weekly chart above, we observe a doji candle stick. This would be the second week the currency pair ended the week as a doji. This suggests significant apprehension and uncertainty. The lower bollinger band functioned as a support as expected.

In the upcoming week, any bullish uplift will need to face off with the significant sentiment and technical region of 0.68. If it is successful, the middle bollinger band will likely function as a resistance.

Should the bearish pressure returns, the lower bollinger band is likely to be a support. A breach will then see the possibility of a test on the significant sentiment and technical region of 0.66.

Looking at the EUR/USD weekly chart above, we note that the week was bullish for the currency pair. Having said so, the EUR/USD did not manage to hold the major sentiment and technical region of 1.1. This suggests that the bearish pressure remains valid.

In the upcoming week, we need to monitor the price action carefully on the shorter time frame. Any bullish continuation will need to establish a foothold above 1.1 before moving on.

A return of bearish pressure will see the EUR/USD dropping to meet the lower bollinger band which will likely function as a support. Should the currency pair be successful, the 1.09 region is the next likely target.

US Economic Data Unpromising

The week brought various US PMIs with worse than expected figures. The releases were below 50 which indicates a contraction. The 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.

In an interesting twist, there were talk that a number of investors saw the disappointing data as an increase in the possibility of another rate cut. In fact, the number of analysts who see the possibility of another rate cut by the US Federal Reserve is increasing. If indeed so, we may see downside pressure on the US dollar as demand weakens while equities rise due to increased liquidity.

US Non-Farm Payroll Mixed

The US NFP brought mixed results. While the number of jobs added was lower than expected, coming in at 136K instead of 145K, the unemployment rate fell to a new 50 years low of 3.5%.

The market appeared to have focused on the new low and equities were seen to be rallying. In our US NPF analysis, it is evident that the US dollar suffered a dip in view of this. It was likely due to the increased risk appetite which resulted in a shift to riskier assets. Members can log in to their dashboards to review it.

Euro Woes Continue

In our midweek forecast, we mentioned that the euro area had no growth in the latest data release. This may be a cause for concern as the euro economy is not out of the woods to begin with. ECB officials were reported to have commented that growth was disappointingly low and that risks to the downside remained.

The Week Ahead

There are many important economic events in the coming week. It is imperative that you practice proper money management so that any unexpected developments may be mitigated. In shorter time frames, price action is often sentimental in nature. This means that price action may change suddenly without warning.

Many speeches are due this week. Find below a consolidated list of major speeches.
USA FOMC Member George Speech
USA Fed Chair Powell Speech
USA FOMC Member Evans Speech
USA Fed Chair Powell Speech
USA Fed Chair Powell Speech
USA FOMC Member George Speech
USA FOMC Member Rosengren 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 NAB Business Confidence
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.

USA Core PPI
USA PPI
Producer Price Index is important because the price of goods sold by producers influences the downstream impact of inflation. If inflation is high, a central bank may increase interest rate to mitigate the situation.

AUS Westpac Consumer Sentiment
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
EUR ECB Monetary Policy Meeting Accounts
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 CPI
USA Core CPI
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.

USA Preliminary UoM Consumer Sentiment
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.

There are many more events and hence it is important to follow an economic calendar. By doing so, you can reduce the possibility of an unexpected development affecting your trading plan.

Members can log in to their dashboards for an economic calendar. The latest premium analysis and our popular Price Action Bias Signals are now available too.

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

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