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EUR/USD Update Forecast: Bets Increased Despite the Absence of Indications

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Latest Premium Analysis Update: Retail Sentiments Analysis 23 Nov 21 View Anlaysis

The week started with more euro weakness, slipping further below 1.18. This is not unexpected.

EURUSD Daily Chart

Technical Analysis

In the EUR/USD daily chart above, we can see the currency pair consolidating around 1.1760.

It is important to note that short-term price action is mostly sentiment-driven. The longer the currency pair remains below 1.18, the more downside positions are stacked as investors switch camp from long to short.

The lower bollinger band is not in the vicinity and this means the EUR/USD has some space to go further south.

Any bullish recovery will need to overcome the strong technical and sentiment region of 1.18.

Sentiment Analysis

SP 500 Daily Chart

Looking at the S&P 500 chart above, we can see that the S&P 500 is almost flat. There had been some downside moves.

The Cboe Volatility Index had increased to 20, indicating that volatility had risen.

Reports of the potential loss of billions of dollars by Nomura and Credit Suisse because of a U.S. hedge fund defaulting on margin calls have resulted in some apprehension. Some bank share prices dropped in response. Having said so, the recent optimism in the markets helped cap sliding prices. A check on gold also reveals the absence of any excessive selloff.

Regardless, monitor the development closely because if bearish sentiment continues, it may trigger a cascade of risk aversion.

The latest Retail Sentiment Analysis Report from our Premium Analysis Service is showing a significant change in the EUR/USD sentiment. This has implications, as it represents increased speculation. The EUR/USD is not showing signs of a corresponding change in momentum at present. Members should log in immediately to view the latest report.

Up next we have the USA CB Consumer Confidence economic event. 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 upcoming economic crisis.

It is expected to report 96.9. We need to monitor this release for possible clues to the direction of the EUR/USD for the rest of the week.

Do be reminded that the week is stacked with many important economic releases for the US. Proper money management is important to mitigate excessive risks from volatility.

The Week Ahead

There are many 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.

If the US continues to report better than expected economic data, it will probably weigh down on the already battered Euro Zone.

USA ADP Non-Farm Employment Change
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.
ADP’s statistics are based on the payroll data of approximately 400,000 U.S. business clients. Therefore, it is viewed by many as a possible early indication of the US Non-Farm Payroll result.

USA Pending Home Sales
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.

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.

USA ISM Manufacturing PMI
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.

USA Average Hourly Earnings
Consumer earnings is important because of its upstream impact. With more earnings comes possibly 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

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