The EUR/USD is currently bullish.
Technical Analysis
On the EUR/USD hourly chart, we can see that the bullish momentum started right from the opening of the new forex trading week. It is now facing resistance from the upper bollinger band. A successful breach will see the currency pair make an attempt on the strong sentiment and technical region of 1.1.
Any bearish recovery will probably face support at the middle bollinger band, followed by 1.09 and the lower bollinger band.
Looking at the EUR/USD daily chart, we can see that the bullish momentum is currently capped by the upper bollinger band. This region and by extension 1.1 will likely require a significant push to fall. We can see a number of previous failed attempt on this region.
If the bullish momentum succeeds, we are likely to see resistance at 1.11.
A return of bearish pressure will probably face support at 1.09, the middle bollinger band and the strong sentiment and technical region of 1.08.
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
Investors are currently in a risk on mode, fueled by a number of developments. Equities worldwide mostly rallied and the price of oil has climbed.
Hopes are raised for the Euro Zone as an agreement by Germany and France for a 500 billion rescue fund eased some of the apprehension plaguing the region. This fund will be used to help Europe recover from the economic fallout of the COVID-19 pandemic.
A US biotechnology firm reported that a test vaccine is producing encouraging results. Moderna Inc conducted a small sample human vaccine test which resulted in an immune response to combat COVID-19. While this doesn’t mean that a working vaccine is imminent, the speculation of having one is fueling risk appetite. As a recovery for the economy is dependent on an open and functioning social climate, a working vaccine is vital for success.
Do continue to monitor the market developments as a sentiment driven momentum may change in an instant when unexpected situations emerge. US Federal Reserve Chair Powell is also expected to testify shortly and hence do be prepared for possible volatility. Members should log in to view the latest Forex Sentiment Analysis.
The Week Ahead
There are a number of important economic releases and events for the week, including several Purchasing Managers’ Indexes. Any development that may lend weight to the current apprehension may further add to the sentiment and increase the intensity of it. You can find a number of them listed below. ( Not in chronological order )
USA Fed Chair Powell Testifies
Testimonials may reveal new insights to economic policies or the question and answer segment may go into unexpected topics resulting in unexpected developments and volatility.
USA FOMC Meeting Minutes
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 Fed Chair Powell 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.
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 Unemployment Claims
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.
USA Flash Manufacturing PMI
EUR French Flash Services PMI
EUR French Flash Manufacturing PMI
EUR German Flash Manufacturing PMI
EUR German Flash Services PMI
EUR Flash Manufacturing PMI
EUR Flash Services PMI
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.
The Bottom Line
It is important to follow an economic calendar as your forex trading plans may be impacted due to shifting sentiments. Members do log in to your dashboards for the economic calendar. You should also review the latest Major Currency Pairs, USD Index, Gold, Brent Oil analysis to complement your forex trading plan.
Traders should always practice proper money management and seek to understand the underlying tones for the market. May the pips be with you!
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