Good day forex traders.
Welcome to the weekly review of the popular EUR/USD.
How was your trading for the week? Hope it was fantastic!
In the previous EUR/USD forecast we noted that the currency pair had risen above 1.14 after a failed attempt to push downwards. We might be seeing the development of a pivot at 1.14. The US economic growth might have peaked as the higher interest rate starts to moderate economic activities. The euro zone in the meanwhile remained largely in a quantitative easing state.
Looking at the EUR/USD weekly chart above we note that the currency pair is currently testing the region of 1.16. This is usually a strong support and resistance line and hence we need to see if the momentum manages to make a clean breach above.
Should the EUR/USD eases downwards, a pivot scenario will be an increased possibility.
Medium term targets would be 1.18 for bullish and 1.16 for bearish scenarios.
At the Jackson Hole symposium, US Federal Reserve chair Mr Powell commented that the consensus of the officials is that of a conservative approach towards rising interest rate. This is believed to be the best balance between the risk of an overheated economy due to excessive capital and the risk of excessive tightening putting a stop in the economy’s growth. Traders hoping for an acceleration in the rate of increase of interest rate were probably disappointed and hence the drop in the US dollar demand / value.
US GDP data is due to be released this coming week. It is a broad measure of economic activity and hence viewed by many as the fundamental gauge of economic health. Do practice proper money management in case of any unexpected development.