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EUR/USD Forecast Update 5 Mar 20

The EUR/USD is currently in an attempt to test 1.12.

Technical Analysis

eur usd hourly

On the EUR/USD hourly chart, we observe a bullish climb that began a few hours earlier. In the previous update, we mentioned that the EUR/USD would need to push beyond the middle bollinger band and 1.1170 region before we could expect an attempt on 1.12. The currency pair seems to have cleared the 1.1170 and hence the possibility of a push for 1.12 is present.

A bearish recovery will likely turn the EUR/USD back to the middle bollinger band / 1.1140 region.

eur usd daily

Looking at the EUR/USD daily chart, we can see with increased clarity of the attempt on 1.12. The currency pair has not gone much beyond 1.12 for many months now and hence we should be watching this closely. The price action has stretched the bollinger bands and we are expecting some pull back influence towards the down side.

A failed bullish run should ease into 1.1140 as mentioned earlier, followed by the 1.1110 region as seen on the daily chart.

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 US Federal Reserve made an unscheduled emergency cut of interest rate by 0.50% to a target range of 1.00% to 1.25%. This is in response to the increasingly challenging economic situation brought upon by the COVID-19 crisis. We mentioned prior to this interest rate cut in our previous update that there are increasing speculations of an interest rate cut. We released an update on this emergency cut to our premium analysis members shortly after the development that we see a muted response as the rate cut was likely priced by the market. This has indeed appeared to be so.

The USA ADP Non-Farm Employment Change performed better than expected, reporting an increase of 183k employment instead of 170k. Expectations are likely set for an expectation of a corresponding positive USA Non-Farm Employment Change. We should pay close attention to the unemployment rate as in the previous month it was worse than expected. A repeat may inject negative sentiment into the markets.

Find below a number of the other significant economic events that are expected for the week.

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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