Good day forex traders.
Welcome to our weekly review of the EUR/USD.
Did you trade this week? I would love to hear about it!
In the previous forecast, we note that the currency pair ended the week slightly bullish as a doji. The week was mixed for the US dollar but we did see indications that the currency pair continued to be weighted down. If the bearish momentum strengthens, the lower bollinger band would be the immediate target, followed by 1.12.
Looking at the EUR/USD weekly chart above, we note that the currency pair is bearish for the week. As mentioned in our last review, bearish undertones remain. The 1.14 continues to play it’s role as a strong resistance. While the momentum was not enough for the bearish pressure to test the lower bollinger band, the fact that it remains below the middle bollinger band means we have to be mindful of possible extension of the bearish price action.
Should the upcoming week result in a bullish recovery, 1.14 will be a level to watch out for as an immediate bullish target.
We see a gain for the US dollar across the majors that we track. This may suggest a broader momentum. ( Members can view the latest Major Currency Pairs and US Dollar Index analysis in their dashboards )
The Case Of Who’s Weaker
A number of analysts are of the view that the euro may gain versus the US dollar gradually. The interesting point to note is that the euro is not expected to do much better. Instead the gain versus the US dollar would be due to a weaker US dollar. There are reports stating that the US dollar is at it’s peak. I would advise monitoring the economic data of both regions. You can do this easier with an economic calendar. ( Members can log in to the dashboard for the economic calendar )
Union Of Challenges
The euro’s 20th anniversary was marked by ECB President Mario Draghi. He acknowledged that some countries are facing challenges because of choices made in domestic policy. He also mentioned of an incomplete monetary union which adds on to the challenges. Long time readers will know that i have mentioned this previously. The euro zone faces additional challenges due to the different economic progress and characteristics of the member countries. Any policies crafted will be to be balanced and there may be compromises.
ECB President Draghi mentioned that risks are worsening for the euro area economy. This likely affected sentiments as investors are speculating that further tightening would come even later.
One Last Rate Hike
The US Federal Reserve is due to meet for the last time this coming week. Investors expect that the interest rate will be hiked bringing it to a total of four times this year. Of particular concern would be the schedule of interest rate hikes for 2019. It was expected to be three but recent dovish developments are presenting with the idea of two instead. This will probably have a negative impact on the sentiments towards the US dollar.
The Week Ahead
Besides the US Federal Reserve event due in the upcoming week, figures concerning US manufacturing and GDP will be released too. Over in the euro zone, we have important data due such as the German Ifo Business Climate. As this is a survey of businesses, it is an important gauge of economic health. In view of the low volume trading due to the year end festivities, proper money management is crucial.