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EUR/USD Forecast Update 27 Nov 19

The EUR/USD is bearish as of now.

Technical Analysis

On the 15 minutes chart, the EUR/USD is in a bearish channel formed by the lower and middle bollinger band. It is testing the 1.1 region.

On the hourly chart, the EUR/USD is bearish and we observe some support from the lower bollinger band. An increase it momentum will thus put it on a direct test on the important sentiment and technical region of 1.1.

On the 4 hourly chart, we see a similar bearish momentum. The currency pair has been bearish for almost a day. In this time frame, the bollinger bands are not in the vicinity and hence the immediate support is 1.1.

Lastly looking at the daily chart, we see the EUR/USD testing the region of 1.1. A successful breach will likely see the lower bollinger band function as the next resistance.

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 Richmond Manufacturing Index was much worse than expected. Coming in at a -1 instead of 6, this indicates a deteriorating situation. As a survey of manufacturers, this 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. The dismay result likely injected risk aversion into the market.

Here are a number of the significant economic events that are expected.

USA Core Durable Goods Orders
USA Durable Goods Orders

Reports on the orders of goods are leading indicators of production and thus the level of economic activities. Increasing purchase orders suggests that manufacturers will increase activity to meet the demand, providing downstream benefits such as employment. On the other hand, decreasing orders may indicate an upcoming economic crunch.

USA Preliminary 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 Chicago 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 Core PCE Price Index
While the Personal Consumption Expenditures index is similar to Consumer Price Index, it focuses on individuals. It is a component of inflation and if inflation is high, a central bank may increase interest rate to mitigate the situation.

USA Personal Spending
While Personal Spending is similar to Retail Sales, it focuses on consumers. It is a fundamental component of the economy because as consumers spend, it translates to revenue and flows up stream as salaries, wholesales purchase, production orders and so on.

USA Crude Oil Inventories
Movement of oil supply may bring insights to the level of general economic activities. For example, an increasing supply may suggest excessive production or diminishing demand. A reducing supply on the other hand may suggest an economic pick up.

EUR German Preliminary CPI
EUR CPI Flash Estimate

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.

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 are available too.

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Traders should always practice proper money management and seek to understand the underlying tones for the market.

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