The EUR/USD is currently bullish.
Technical Analysis
On the 15 minutes chart, the EUR/USD is near an upper resistance region of the current range. For the bullish momentum to continue, this range must be broken.
On the hourly chart, the resistance’s influence can be seen as we observe candles withdrawing from the region. The upper bollinger band is currently reflecting the current resistance.
On the 4 hourly chart, we see a bigger picture of the current bullish momentum. The current region of price action was previously a support and resistance level too. You can see it manifesting on 7 Jan.
Lastly looking at the daily chart, we observe the EUR/USD breaking above the middle bollinger band. This suggests a possible continuation of the bullish momentum. If this continues, the strong sentiment and technical region of 1.12 will likely be the next resistance.
A bearish recovery will likely see the currency pair face off with the middle bollinger band.
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
Phase 1 of the US China Trade Deal has been signed. This may ease the risk aversion for now but we need to monitor closely to see how are the markets reacting in the coming days.
The US CPI and US PPI results were weaker than expected. This could have added negative sentiment for the US dollar.
In a short while, the ECB Monetary Policy Meeting Accounts will be released. Investors and analysts will be combing through the accounts to gain insights to the central bank’s economic stance. If the expectation differs, there may be increased volatility.
The US Retail Sales will be released later too and it is estimated to be 0.3%. 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.
Here are a number of the significant economic events that are expected.
USA Philly Fed Manufacturing Index
This survey of manufacturers is important as the sentiment of businesses is a leading indicator of economic health. A healthy sentiment suggests that an economy is moving along well and with the activities of the businesses, downstream benefits will happen such as employment and investment.
USA Building Permits
The construction of a building generates many economic activities. Jobs will be created for construction workers, the various sub contractors and services associated with new buildings such as power, water, furniture 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.
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EUR/USD Forecast Update 16 Jan 20
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