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EUR/USD Forecast Update: Euro remains resilient above 1.2

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Latest Premium Anlaysis Update: Retail Sentiments Analysis 4 May 21. View Anlaysis

The EUR/USD remains above 1.2, defying bearish pressure.

EURUSD Daily Chart

Technical Analysis

In the EUR/USD daily chart above, we see the currency pair climbing towards 1.21.

Having shrugged off bearish resistance, it now faces 1.21 as the next target.

It is also prudent to note that the upper bollinger band is stretched. This adds bearish pressure to the price action.

Any bearish recovery will need to tackle the strong support region of 1.2.

Sentiment Analysis

SP 500 Daily Chart

Looking at the S&P 500 chart above, we see that Monday was a bearish day. This was mainly due to a pullback of technology stocks.

The Cboe Volatility Index had jumped to almost 18, marking the return of some volatility.

The US Federal Reserve repeated its view that any spike in inflation was probably temporary. We know that a rise in inflation may prompt the central bank to take tightening measures. Hence to comment that it was likely temporary, investors saw it as a dovish stance and punished the US dollar for it.

The latest Retail Sentiment analysis for members is available. It further confirms the previous indication. If this continues, we will need to seriously consider the change of the EUR/USD climate. Members should log in immediately to view the report as it may affect your forex trading plans. If you are not a member, sign up now and enjoy a 10 days risk-free money-back guarantee.

As the early week is mostly devoid of significant releases, we cannot be 100% sure of the current price action because of a lack of strong sentimental push. As we move into mid-week, keep a lookout for the economic releases and the reported data. Any unexpected development will spark some unexpected price action.

The Week Ahead

There are a number of important economic events this week. I highly encourage you to read through and learn about these events. This helps improve your understanding of the market sentiment.

The European Central Bank is due to release its policy statement and interest rate decision. Pay close attention as any dovish stance taken by the officials may significantly dampen the sentiment for the euro. The implied positioning of the central bank towards monetary policies may cause traders to take preemptive positions. The possibility of an increase in the interest rate or tightening policy may cause increased demand, while the possibility of a decrease or accommodative policy may cause the currency to be sold.

We also have numerous PMI data expected towards the end of the week. These may shed light on the recovery of the economies and give an indication of possible sentiment changes.

USA Crude Oil Inventories
This gives insight into the supply and demand of oil, which may tell us more about the economy’s health. An expanding economy typically uses more oil, while a contracting one may result in significant excess.

EUR Main Refinancing Rate
A high interest usually generates demand while a low interest may result in the selling of the currency for better yielding alternatives. Therefore the interest rate result usually has a significant impact, especially when it is an unexpected result.

EUR Monetary Policy Statement
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.

EUR ECB Press Conference
Press conferences may go into unscripted territory during the Question and Answer segment and hence may spur unexpected developments and volatility.

USA Unemployment Claims
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, while a high unemployment rate suggests a challenging economic climate.

EUR French Flash Services PMI
EUR French Flash Manufacturing PMI
EUR German Flash Manufacturing PMI
EUR German Flash Services PMI
EUR Flash Manufacturing PMI
EUR Flash Services PMI
USD Flash Manufacturing PMI
PMI or A 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 fewer business activities because of prudence.

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