Good day forex traders.
Welcome to our weekly review of the popular EUR/USD. How was your forex trading for the week? Slow and steady wins the game!
In the previous EUR/USD forecast we noted that while the currency pair was bullish, it might not be an end to bearish momentum. The currency pair remained below the middle bollinger band and a clear establishment above 1.14 would be required before we could expect further upside momentum.
Looking at the EUR/USD weekly chart above we note that the currency pair turned bearish for the week. 1.14 remains a highly contested region, resulting in the pivot like swings around it.
The upcoming week will likely be met with a high uncertainty. Being a pivot, the price action may be bullish or bearish depending on short term sentiments. Members are highly advised to log into your dashboard to review the economic event calendar. These events may influence sentiments.
Bearish undertone probably remains
It is important we acknowledge the fact that the EUR/USD has trended lower over the months. While there is no 100% certainty to any forex momentum, knowing that a bearish environment exists will help us plan our trades. Especially if you want to enter into a long position.
Euro Zone is a group of diverse economies
The main backdrop to the euro zone is that it is a group of economies that are of different characteristics. We know that monetary policies are different for developing and developed economies. In the euro zone this may make monetary policies blunt as the European Central Bank seeks to find a balance. This in turn results in less flexibility and the ability to adapt fast. Many investors are aware of this and often sell the euro when complications occur. The recent examples are Brexit and the Italian budget crisis.
It was reported that the European Commission has rejected Italy’s plans and there are members in favour of disciplinary action. The Italian government defended it’s plan and is of the belief that it would boost the economy. Investors do not take kindly with governmental disagreements and sentiments are likely to be impacted.
Prudence is advised as there is an EU summit underway. A forex gap may result if expectations differ widely. We do not encourage the trading of any forex gap as there is no 100% certainly that forex gaps will close. You should monitor for developments on the Brexit situation. Members can log in to their dashboard to check for the latest comments from our team.
The week ahead brings much uncertainty
The upcoming week is filled with many important economic events. ECB President Mario Draghi is expected to comment on the economy and monetary policies before the European Parliament Economic and Monetary Affairs Committee early week. The US Federal Open Market Committee meeting minutes is due to be released too and any unexpected insights may trigger reactions too. ( for example an extremely dovish stance instead of the current moderated approach )
Gentle reminder on the G20 meeting towards the end of the week. We may get developments on the US China trade war as US and China officials are expected to talk.