In the previous review of the EUR/USD, we note that the momentum failed to maintain a foothold against the strong support of 1.12. In the subsequent bullish recovery, it brought the currency pair up to a region where the resistance of the middle bollinger band and 1.14 laid ahead. It remained to be seen if the 1.14 would be broken as it is a strong resistance region and the EUR/USD had been making lower highs.
Looking at the EUR/USD weekly chart above we noted that the currency pair was bearish for the week. This is inline with the Price Action Bias Signals for EUR/USD. At the beginning of the week, we updated the signal from neutral to slightly bearish. While we are definitely pleased 🙂 with the performance of the signal so far, we will like to gently remind again that nothing in forex is 100%. The Price Action Bias Signals analysis only serves as an indication of possibility. Members should take advantage of this proprietary feature and log in to your dashboards when the week starts to see the latest updates.
In the week ahead, we expect the lower and middle bollinger bands to be the immediate support and resistance regions. The sentiment regions of 1.12 and 1.14 will function as the second level of support and resistance.
Euro Zone Data Dances
During the earlier part of the week, the German ZEW Economic Sentiment was released. It is a survey of around 300 German institutional investors and analysts on the next 6 months economic outlook for the country and it came in much better than expected. It was estimated to be -11 but the actual figure was -3.6. Germany is the largest economy in the Euro Zone and the positivity brought much welcomed relief. Having said so, this was not the case for the rest of the week. Most of the flash manufacturing and services Purchasing Managers’ Indexes came in worst than expected. Considering that these are leading indicators of the economy, the impact on sentiments were likely significant. With the European Central Bank looking to add stimulus, the delayed prospect of an interest rate hike will continue to weight on the euro currency.
The Brexit situation continues to weight on sentiments as a new vote will be called upon on another version of the Brexit deal. The previous 2 iterations were rejected. Geo political issues are often not taken kindly by investors and hence we need to be mindful and monitor the developments.
US Federal Reserve Concerns
Ever since the US Feds signaled a slow down in the interest rate hike plan, it is something we need to factor in our trading plan. Previously there may be a bias towards the US dollar due to the prospect of high interest rates. Now that the situation has changed, many are re-evaluating the currency. As mentioned before, the comparison of the US dollar and Euro currencies is often of which is in a weaker situation.
The week ahead
Next week brings many scheduled speeches by members of the US Federal Reserve and the ECB President is due to speak too. In such events, there may be questions asked that go off script. This may reveal new insights to policies and cause increased volatility.
The US is scheduled to release the latest survey on Consumer Confidence and the Gross Domestic Product data. Germany is scheduled to release the German Ifo Business Climate and Preliminary Consumer Price Index.
There are also many other releases to be expected. It is always prudent to follow an economic calendar and members can log in to their dashboards for one. The latest Price Action Bias Signals have been updated and members should log in to their dashboards now to view.
As always, do practice proper money management.