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EUR/USD AUD/USD Weekly Forecast 9 Dec 19

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In the previous AUD/USD weekly forecast, we observed that the currency pair was bearish for the week. While it went below 0.68, the breach of 0.67 was not achieved. The lower bollinger band was straightening, suggesting that the actual downwards slide of the price might be gradual for now.

In the previous EUR/USD forecast we noted that the week was slightly bearish for the week and ended almost a doji. This might be due to uncertainties as the currency pair struggled to find direction.

A bullish recovery would meet possible resistance at the middle bollinger band. There was the possibility that the middle bollinger band and 1.11 region would synergise, putting up a stronger resistance.

Technical Analysis

Looking at the AUD/USD weekly chart above we note that the currency pair was bullish for the week. As expected, the gradual straightening of the bollinger bands foretold a bigger surprise in the form of an upside spike.

In the week ahead, we will likely see the 0.68 region function as support while the upper bollinger band and 0.69 function as resistance. Extended targets will probably be the lower bollinger band and 0.7 respectively.

Looking at the EUR/USD weekly chart above we note that the currency pair was bullish for the week. The strong sentiment and technical region of 1.1 held, resulting in an upside push. The momentum was likely over stretched as it retreated from it’s high to close the week below the middle bollinger band. Indeed it appeared that as per our previous forecast, a certain synergy developed between the resistance of the middle bollinger band and 1.11.

Long term readers will know that in our decade of market observation, we have come to the conclusion that the bollinger bands provide for a good complement to our forex trading analysis. Often we would see notable price action at those levels. In fact, the bollinger bands are one of our considerations for our Price Action Bias Signals.

In the week ahead, a continuation of the bullish momentum will require it overcoming the middle bollinger band before proceeding to 1.11 / 1.12.

A return of bearish pressure will likely see a retest of the crucial 1.1 region, followed by an extended bearish target at the lower bollinger band / 1.09.

US China Trade Dance

The markets continue to be influenced by the trade negotiation of the two economic powerhouse. This is especially true for the Australian dollar as China is an important trading partner for the country.

There were reports that Chinese officials were open to certain compromises and that this would likely result in the situation being made closer to a phase 1 agreement.

Positive developments usually result in upside pressure for the Australian dollar and perhaps even for the Euro to a certain extent.

US Non-Farm Payroll Delights

The US NFP was much better than expected. It reported an increase of 266k jobs instead of the expected 181k. The unemployment rate also gave a positive surprise, dropping to 3.5% which is a decades low instead of the expected flat of 3.6%. 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.

Members who have access to our premium analysis will notice a peculiar outcome of the US NFP. The EUR/USD was bearish while the AUD/USD was bullish.

With an understanding of the underlying tones of the markets, this will likely be not so much of a surprise. The Australian dollar is often influenced by risk appetite and the upbeat report has likely spurred demand.

On the contrary, the Euro Zone is often held in comparison with the US. The upside figures from the US is the opposite of the Euro Zone where complex economic challenges continue to exert a drag. As the new European Central Bank president Lagarde takes over, the markets will be watching closely to gain insights to the stance of her economic policies. Hence the clear positivity of the US NFP likely resulted in demand for the US dollar. This brings us to a certain point that we often remind our readers.

It is important to understand the undertones of the markets.

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.

AUS RBA Gov Lowe Speech
AUS RBA Assist Gov Bullock 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 HPI
The House Price Index gives insights into the housing industry’s health. If house prices are rising, it will attract investors and result in economic activity.

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.

EUR German ZEW Economic Sentiment
As a survey of analysts, this sentiment report holds a weight. Their sentiments may be derived from their working knowledge of the economy and hence may be an early indicator of economic health.

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 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 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 Economic Projections
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.

USA FOMC Statement
Interest rate related statements are given much attention by analysts and investors as it has a direct impact on the currency. Investors usually favor a currency with a higher interest rate and will analyse these statements thoroughly for insights on the interest rate policy.

USA Federal Funds 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.

USA FOMC Press Conference
Press conferences may go into unscripted territory during the Question and Answer segment and hence may spur unexpected developments and volatility.

EUR Main Refinancing 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.

EUR Monetary Policy Statement
Interest rate related statements are given much attention by analysts and investors as it has a direct impact on the currency. Investors usually favor a currency with a higher interest rate and will analyse these statements thoroughly for insights on the interest rate policy.

EUR ECB Press Conference
Press conferences may go into unscripted territory during the Question and Answer segment and hence may spur unexpected developments and volatility.

USD 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.

USA Core Retail Sales
USA 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.

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

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