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EUR/USD Forecast Update 5 Nov 20

In our previous update, we made mention of the collective support strength put up by the lower bollinger band and the strong sentiment and technical region of 1.16. We also stressed the importance of monitoring the market sentiment for changes.

EURUSD Daily Chart

Technical Analysis

Looking at the EUR/USD daily chart above, we see a failed test on the strong sentiment and technical region of 1.16. As mentioned previously, bollinger bands continue to play an important role in our technical analysis and once again it has proven so. After the rejection by the lower bollinger band and 1.16, the EUR/USD has risen above 1.17 and is now testing the middle bollinger band.

If the bullish recovery continues, it is likely that the strong sentiment and technical region of 1.18 will function as a significant resistance. Beyond that, we see the upper bollinger band as an extended target. Any bearish return will likely see the lower bollinger band function as a support again.

Fundamental Analysis

The S&P 500 has risen for 3 days in a row. This is a strong indication of risk appetite. As mentioned in our previous update, it is important to ascertain the ongoing sentiment of the market. If the risk aversion recedes, we may see a reversal of the current price action. This is happening now as the EUR/USD has risen 3 days in a row too. We urge our readers to continue monitoring the market sentiment so as to avoid unnecessary losses.

In the Retail Sentiment Analysis update released for our members on Monday, there was a significant rise in bullish sentiment for the EUR/USD. We made special mention of it then and would like to congratulate all members who have factored this in their forex planning.

The US Federal Fund Rate event is due later and it is expected to hold rates at <0.25%. As the FOMC statement will be released, do be on the lookout for any expected developments. Monetary policy statements are given much attention by analysts and investors as it has an impact on the economy. The minutes will be analyzed thoroughly for insights on the economic policy ahead. Significant volatility may be generated if there are unexpected revelations.

The US-Non Farm Payroll is due this Friday and many will be analyzing the numbers closely as employment is a fundamental component of the economy. It leads to consumer spending and hence retail sales. A low unemployment rate is an indicator of a healthy functioning economy. The US NFP is 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

Therefore if there is any unexpected development, price volatility may increase.

Lastly, the US Presidential Election is underway and at this point in time, there is no significant impact on the price action. Having said so, as the counts approach the end, we need to be vigilant against any possible volatility upon the determination of the winner.

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