Good day forex traders.
Welcome to our popular EUR/USD weekly review. How was your last week’s trading? Hope you made lots of pips!
In the previous forecast we noted that the currency pair was approaching possible resistance. 1.2 was in the vicinity along with the upper bollinger band.
Looking at the EUR/USD weekly chart above we note that the currency pair indeed experienced resistance. It was a spot on call! Let’s give ourselves a pat on the back.
At the moment the EUR/USD is tightening in range. This suggests that the market may be divided in opinion. From a technical point of view, this may result in a squeeze and subsequent break out.
The US Federal Reserve hiked the interest rate as expected. Many analysts expect this to continue in 2018. The central bank expects 3 interest rate hike in 2018.
Over across the Atlantic, the European Central Bank commented on an improving Euro Zone economy. BBC reports :”
The European Central Bank (ECB) has lifted its economic growth forecasts as growth across the eurozone picks up.
It now expects the eurozone’s economy to grow 2.4% this year, ahead of its previous guidance of 2.2%.
The bank also kept its main interest rate at zero and confirmed its asset purchase programme would drop from €60bn to €30bn a month in January.
ECB president Mario Draghi said: “We are certainly more confident today than we were two months ago.”
Pressure on the ECB to tighten policy has been growing as the eurozone economy has gathered strength.
The bank also raised its GDP growth forecast for next year to 2.3% from 1.8%, and for 2019 to 1.9% from 1.7%.
The ECB slightly lifted its inflation expectation for next year but its guidance remains below its target of close to, but below, 2%.
Mr Draghi said: “Domestic price pressures remain muted overall and have yet to show convincing signs of a sustained upward trend.” ”
My opinion on the above is such that we need to see a domestic pick up before we can expect greater momentum. The economy is pretty much driven by consumption. As we head towards the end of the year, liquidity may be challenged. This may result in extremes so proper money management is recommended as always.
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