The EUR/USD is currently still bearish.
Technical Analysis
Looking at the EUR/USD hourly chart, we can see the slowing of the bearish momentum. Having said so, we do observe the repeated attempts by the currency pair to breach 1.09. This suggests some bearish inclinations underlying the price action.
If 1.09 falls, the next support will likely be the strong sentiment and technical region of 1.08. On the other hand, if a bullish recovery happens, we will probably see the middle bollinger band function as an immediate resistance, followed by the upper bollinger band and 1.1.
On the EUR/USD daily chart, we can see the continuous bearish momentum since the start of the week. There remains a possibility that the 1.1 region will exert pivotal influence which will result in increasing bullish pressure. If that is not the case, we may be seeing the return of bearish momentum and it’s attempt to take the EUR/USD lower. It will be good to leverage on the hourly chart so as to track the outcome of the 1.09 bearish test.
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
Both the ADP Non-Farm Employment Change and USD ISM Manufacturing PMI were reported to be better than expected. This likely brought some relief to the US dollar as employment and production are important facets of the economy. With the positive jobs data, investors will likely expect to see a similar outcome for the USA Non-Farm Employment Change.
The US Unemployment Claims is due shortly and this figure will be closely monitored. The previous shock of the much worse than expected 3283k will be fresh on many minds. The number of unemployment claims are expected to be 3600k. A worse than expected release will likely see sentiment deteriorate while a better than expected data will likely ride on the positive trend set by the earlier US economic releases.
Find below a number of the other significant economic events that are expected for the week. ( Not in chronological order )
USA ISM Non-Manufacturing 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.
USA Average Hourly Earnings
Consumer earnings is important due to it’s upstream impact. With more earnings comes possible increased consumer spending. This translates to revenues, leading to employment and business expansion.
USA Non-Farm Employment Change
USA Unemployment Rate
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.
The US Non-Farm Payroll is basically data released by the U.S. Bureau of Labor Statistics on a monthly basis that represents the total number of employed US workers, excluding the following employees:
– general government employees
– private household employees
– employees of nonprofit organizations which provide assistance to individuals
– farm employees
The Bottom Line
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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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.
Traders should always practice proper money management and seek to understand the underlying tones for the market.
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