Good day forex traders.
Welcome to our weekly review of the EUR/USD. I hope you had a great week trading the currency pair.
In our previous review we noted that the US dollar was facing depressing pressure as the US Federal Reserve meeting minutes came up more dovish than expected. A clear breach of the 1.18 would likely bring 1.2 into focus.
Looking at the EUR/USD weekly chart above, we note of a bullish recovery underway. While 1.2 is the immediate bullish target, we may see resistance as the upper bollinger band lies in the current region.
The market sentiments are likely to favor the euro zone at the moment as indicators continue to suggest a positive situation.
Bloomberg reports ”
German companies are more confident than ever as they tap into the global economic upswing.
A measure of the nation’s business confidence set a new record high in November. The Ifo institute’s index climbed to 117.5 from a revised 116.8, beating economists’ estimates for the gauge to remain unchanged.
“The recent uptick is the index is mostly due to the manufacturing sector, so the export industry really,” Ifo Institute President Clemens Fuest said in an interview on Bloomberg Radio. “We’ve had a strong domestic economy for some time and what’s being added now is a stronger global economy.”
Europe’s largest economy has soared this year as global trade picks up and the euro area’s revival becomes more broad-based. The Bundesbank predicts that German momentum will carry into the final quarter, and economists foresee the fastest expansion since 2011. There is also no danger of overheating just yet as inflation remains low, according to Fuest.
“The current situation in Germany is an excellent illustration of a phenomenon which has characterized the entire eurozone throughout the year: buoyant confidence and strong economic growth goes hand in hand with political uncertainty and instability,” said Carsten Brzeski, chief economist at ING-Diba AG in Frankfurt. “This dichotomy can easily continue in 2018.”
In the wider euro area, economic growth is powering ahead, with the European Central Bank claiming credit for the most synchronized upswing since the single currency was founded almost two decades ago. A purchasing managers index measuring private-sector activity accelerated in November after new orders surged the most in more than 6-1/2 years, and companies added jobs at one of the fastest rates in at least two decades.
While the ECB says its extraordinary monetary stimulus is driving growth, policy makers are considering plans for gradually withdrawing some of their support. ”
Germany is the largest economy in the euro zone and hence investors often place significant influence on its economic performance.
The upcoming week brings much economic data such as the US prelim GDP and Germany Retail Sales. We are also expecting the US Federal Reserve chair to testify on the US economic outlook before Joint Economic Committee of Congress, in Washington DC. Unexpected developments will likely affect the currency pair.
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