Since the start of the new forex trading week, we observe that the EUR/USD is drifting towards the upside.
Looking at the EUR/USD hourly chart above, we can see the currency pair testing the upper bollinger band. Further up the range around 1.116, lies an immediate resistance region. You can see the influence it had on last week’s price action.
If the bullish momentum manages to gain further strength, 1.12 will be the next resistance. Should the bearish pressure return, the immediate support will be 1.1120 followed by 1.11.
Euro Zone Sees Some Light
The German Preliminary Consumer Price Index reported a better than expected result. It is 0.5% instead of the expected 0.3%. 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. With Germany being a significant component of the Euro economy, this development likely sparked some positive sentiment for the euro currency. This is likely contributing to the upside drift of the EUR/USD.
US Economic Data Ahead
The US Core PCE Price Index and US Personal Spending reported as expected data moments ago. This will likely come across as neutral in terms of sentiment. Having said so, the US CB Consumer Confidence data is due in around an hour and consumer surveys are influential as the sentiment of consumers is a leading indicator of economic health. Any unexpected result will likely induce volatility into the price action. 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 much more economic data due to be released for both sides of the Atlantic. A number of them such as the US ADP Non-Farm Employment Change and US Non-Farm Payroll yield much influence on the price action. 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.