Good day forex traders.
As we get ourselves ready for the new trading week, it is my humble wish that everyone made pips for the week. As I always mentioned, as long as you practice proper money management, you are already half way there!
In the previous EUR/USD forecast we noted that the bearish momentum was making a point to punch beyond 1.14. A clear confirmation was required before we could consider the road to 1.12. As the US interest rate rises, the dampening effect due to high borrowing costs is inevitable.
Looking at the EUR/USD weekly chart above we note that the bullish participants of the forex market have managed to bring the currency pair above the 1.14 support and resistance line. Should the EUR/USD continues to range around the 1.14 region this coming week, we may be looking at a new pivot at 1.14. Both sides of the trade will then bounce off with the stronger demand finally shifting the momentum. Medium term targets will likely be 1.12 or 1.16.
The US retail sales was higher than expected. Having said so the housing start as per what I mentioned in the previous review was indeed lower than expected. An annualised 1.17m of new residential buildings began construction instead of the expected 1.27m.
Over in the euro zone, monetary policies have not caught up with the US tightening stance. Quantitative easing initiatives are still pretty much available and hence the euro currency remains unattractive in comparison to the US dollar in that aspect.
The economic issues in Turkey remains a weight on the euro currency. The European Central Bank had previously mentioned that it is concerned about the level of exposure of the European banks to Turkey. Turkey is closely intertwined with the euro zone on an economic basis.
In the upcoming week, we have the US Federal Reserve meeting minutes due to be released. The ECB monetary policy meeting accounts is also due to be released in the upcoming week. Together with the Jackson Hole Symposium ( an event attended by central bankers, finance ministers etc from around the world ), it looks like we may have a busy week ahead. As always do practice proper money management!