The EUR/USD is currently bullish.
Technical Analysis
On the EUR/USD hourly chart, we can see that the strong sentiment and technical region of 1.1 is a tough nut to crack. The currency pair is on it’s second attempt to breach and gain a foothold above it.
If the attempt fails, a bearish recovery will probably face support at the middle and lower bollinger band, followed by 1.09.
Looking at the EUR/USD daily chart, we can see that the bullish momentum is currently capped by both the upper bollinger band and the strong sentiment and technical region of 1.1. We mentioned in our last EUR/USD update that this region will likely require a significant push to fall and indeed it appears so. The price action is now on its second attempt to push above.
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
The various Purchasing Managers’ Indexes from the Euro Zone are all better than expected with the exception of 1. The German Flash Manufacturing PMI came out 36.8 instead of the expected 39.3. These surveys of purchasing managers are 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. While the market is generally interpreting these set of figures in a positive manner, the German economy is a significant component of the Euro Zone economy and if this trend of deterioration continues, we may see an impact on the region.
Across the Atlantic, the US employment situation continues to flash red lights as the latest Unemployment Claims is worse than expected. 2438K people filed for unemployment claims for the first time instead of the expected 2400k. This may be turning out into an unemployment crisis that is even more severe than the 2008 financial crisis.
The Week Ahead
There are a number of important economic releases and events for the week. 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 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.
EUR 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.
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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EUR/USD Forecast Update 21 May 20
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