The EUR/USD is currently consolidating after a bearish Monday.
On the hourly chart, the EUR/USD is testing the 1.09 support. The lower bolligner band is capping the momentum for now. As mentioned in the EUR/USD weekly forecast, this region was the previous low and hence yields significant influence on the price action.
If the currency pair manages to breach 1.09, the next likely support will be the important sentiment and technical region of 1.08.
A bullish recovery will probably see the price action targeting 1.0950. This will bring us back to the week’s open.
Looking at the daily chart, we can clearly see the consolidation for the past two days. The lower bollinger band lies nearby and that will probably be a support to overcome.
The bearish momentum accelerated after breaching 1.1. This is not unexpected due to the stops being triggered and cleared. Now that we are approaching 1.08, we must be on the look out for increasing stops providing opposition to the downside push.
In forex trading, it is important that we observe all time frames to get the pulse of the current situation. Shorter time frames help to ascertain the current price action and sentiments. Longer time frames allow us to understand the momentum of the current price action and sentiments, whether if it is a sustained drive or a knee jerk reaction.
Fundamental and Sentimental Considerations
The death toll continues to rise for the Wuhan virus outbreak. Having said so, analysts are noting the decline of new infections and are hopeful that the situation has peaked. This sentiment is clearly seen in the recovery of the various equity markets. This will probably ease some demand for “safe” haven assets such as the US dollar.
The speech by ECB President Lagarde and testimony by Federal Reserve Chairman Powell were mostly inline with expectations and thus did not spark much price action.
Find below a number of the other significant economic events that are expected for the week.
EUR EU Economic Forecasts
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 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.
EUR German Prelim GDP
Gross domestic product is a measure of the monetary market value of all the goods and services produced. It is an overall measure of economic activity and health and thus wields influence on the home currency.
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.
USA Prelim 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.
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.
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Traders should always practice proper money management and seek to understand the underlying tones for the market.