It is time for a EUR/USD update as we head into the middle of the week.
There had been a slight downside shift and we would explore the various sentiments influencing the price action.
Looking at the EUR/USD hourly chart above, we note that the currency pair is consolidating within the bollinger bands. It is now facing resistance at the middle bollinger band as it seeks to ascent. It is important to note that the bollinger bands are about to narrow. When the range is tight, a breakout may happen due to the squeeze.
If the bullish momentum prevails, we will likely see an attempt to reach 1.22. A continuation of the bearish shift will see the currency pair face support at the lower bollinger band, followed by 1.21.
Equities were shaky since the start of the week. Tech giants fell in value after the moves to ban or suspend the US President’s accounts.
Looking at the S&P 500 chart above, we observe a somewhat flat price action with a slight shift to the downside on Monday. This is similar to the EUR/USD. Risk aversion has increased, resulting in bearish pressure for both equities and the EUR/USD.
A look across the various financial news media now suggests a better sentiment for Tuesday’s US trading. If this happens, we may see some weakening of the US dollar as investors seek risker assets.
The Week Ahead
I am listing a number of important economic events that are due to happen in the upcoming week. These may have an impact on the EUR/USD. I highly encourage you to read through and learn about these events. This helps improve your understanding of the market sentiment.
EUR ECB President Lagarde Speech
US Fed Chair Powell Speech
Speeches may reveal new insights to economic policies or contain a question and answer segment that at times go into unscripted topics resulting in unexpected developments and volatility.
US Core CPI
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.
US 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.
US Core Retail Sales
US Retail Sales
Retail sales is a fundamental component of the economy. As consumers spend, it translates to revenue and flows upstream as salaries, wholesales purchase, production orders, and so on.
Do be mindful that these are not the only events and they are not in chronological order. You should be following an economic calendar so that you will not be caught unaware. Premium members can log in to view the economic calendar.
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