Good day forex traders.
How was your forex trading for the week? Hope it was green with profits!
In the previous EUR/USD forecast we noted that the currency pair remained bearish for the week. It attempted to test the 1.14 region but crashed after failing to establish a support. The EUR/USD was below the middle bollinger band and hence bearish undertones would likely to be present.
A bullish recovery would need to go beyond the resistance of 1.14 and move on to test the middle bollinger band.
Looking at the EUR/USD weekly chart above, we note that the week finished a doji and is slightly bullish.
The week was mixed for the US dollar. ( members can log in to their dashboards and check the latest majors and US dollar analysis )
From a technical point of view, we see that the currency pair remained weighted down. The 1.14 is turning out to be a strong resistance. If a bullish recovery is to be expected, 1.14 must be clearly breached and after which the middle bollinger band will likely be the next resistance.
If the bearish momentum picks up, the lower bollinger band will be the immediate target, followed by 1.12.
US Non-Farm Payroll Disappoints
The US Non-Farm Payroll was worst than expected. 155,000 jobs were added last month instead of the expected 200,000. This probably added to the rising concern in the financial markets that the US Federal Reserve may not go ahead with the plan for 3 rate hikes next year. A currency with high interest rate usually attracts demand.
German and Italian Economies Contract
The European Central Bank is facing challenges as investor confidence drops, growth slows and economic risk increases. Both the German and Italian economies are contacting and due to their significance in the Euro Zone, the region may be impacted too. This definitely affects sentiment. The ECB’s quantitative easing policy is expected to end this year and a number of investors are not sure if the situation is appropriate. ECB President Mario Draghi recently commented that protectionism, vulnerabilities in emerging markets and volatility in the financial market remain a significant risk.
The week ahead is crucial. We have important economic data releases such as US producer price index, US consumer price index and US retail sales. Across the Atlantic we have the European Central Bank interest rate release. Having proper money management is important.