The EUR/USD is currently showing a strong bearish undertone.
Looking at the EUR/USD 60 minutes chart above, we note that the currency pair is currently on a downside push across immediate supports. It is now on a sharp dive towards the strong sentiment and support region of 1.12.
Last week we mentioned that it would be prudent to note that 1.12 might provide a pivotal influence, attempting to shift the price action back to it’s vicinity. As the US market opens and the post holiday liquidity returns to the market, we may be seeing a renewed bearish momentum to continue what we seen over the past few months.
The yellow lines are the possible support and resistance regions in the immediate vicinity. Do note that price action in shorter time frames are often sentimental in nature.
US Housing Data Disappoints
Both the Existing Home Sales and House Price Index reported lower than expected figures. Sales amounted to 5.21m instead of the expected 5.31m. This is a drop of almost 5%. Housing prices crept up at 0.3% instead of the forecasted 0.6%. The purchase of a house results in economic activities. Renovation jobs will be created for construction workers, the various sub contractors and services associated with new ownership such as power, water, furniture and so on. Therefore a drop is likely viewed with negative sentiment.
Iranian Oil Sanction
The Trump administration mentioned that it would not renew the waivers given to allow countries to buy oil from Iran. This means that the countries that do so will be facing U.S sanctions. Investors are averse towards geo political issues and we may be seeing the emergence of risk aversion. During such periods, assets deemed as “safe” such as the US dollar will be sought after. This usually results in the increase of value.
Still to Come
The Price Action Bias Signals moved the EUR/USD to a slight bearish bias this week. Members who have accessed it over the weekend and factored it in their trading plan will probably be in advantageous positions now.
Congratulations! Having said so, do be mindful of the lesson posted over the weekend. It is not a profit until you have taken it. Always have a take profit target and make appropriate use of trailing stop loss to protect the profit. The market can and will change without any notice.
Many important economic events are still to come, including
EUR German Ifo Business Climate
Business Climate surveys are influential as the sentiment of businesses 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. Germany is the largest economy in the Euro Zone and hence any unexpected development may induce volatility.
EUR Spanish 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. Spain is one of the larger economies in the Euro Zone and hence will likely wield some influence on the euro currency.
USA Core Durable Goods Orders
USA Durable Goods Orders
Industrial Orders serve as a leading indicator of economic activity. If orders are high, production will be increased. This flows downstream leading to employment, revenue and more.
USA Advance GDP
USA Advance GDP Price Index
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.
USA Revised University of Michigan Consumer Sentiment
Consumer surveys are influential as the sentiment of consumers is a leading indicator of economic health. A healthy sentiment suggests that an economy is moving along well and hence consumers are confident. This likely leads to increased retail sales. A cautious sentiment on the other hand may see consumers spend less in view of a perceived looming economic crisis.
It is important to follow an economic calendar so that you can reduce the possibility of an unexpected development affecting your trading plan. Members can log in to their dashboards for an economic calendar. Always plan your trades with proper money management.