In the previous EUR/USD forecast, we noted that the currency pair was flat. This suggested a strong downside pressure that might be keeping the EUR/USD depressed. The doji candle could be indicating a level of uncertainty among the various trading parties.
Looking at the EUR/USD weekly chart above, we did observe a bearish week. This is inline with our previous forecast and it is most pleasing to see our understanding of the market conditions validated! A number of our members wrote in to tell of their successes and we wish them a job well done. Having said so, as per our usual naggy selfs, we wish to remind that nothing in forex is 100%. Always expect the unexpected and mitigate your risks with proper money management!
The relative ease of the EUR/USD’s successful attempt to breach 1.18 suggests a significant bearish pressure. Up ahead lies the strong technical and sentiment support of 1.16. It is likely to offer a sizable challenge and hence much will depend on the ability of the bearish down push to maintain its momentum. The middle bollinger band may be the extended bearish target.
1.17 will likely function as the immediate resistance while the strong sentiment and technical region of 1.18 awaits as an extended resistance.
It was reported that apprehension towards the state of the economy is growing. The continued impact of COVID-19 across many industries and countries remains an economic uncertainty. There are countries that are facing an increasingly tough economic situation and a number of analysts are of the opinion that the US’s recovery has stalled.
An economist commented that the economic devastation is about three times worse than 2008 global financial crisis in terms of annual GDP decline. Furthermore, until a reliable vaccine has been created and deployed globally, the pandemic will continue to weigh down on economic activities.
Our premium members received the latest retail forex sentiments analysis last Monday and in that report, we noted that retail forex traders’ interest in Yen had notably dropped in favor of the USD. This was likely one of the early indication of the USD strength experienced in the week. We have been analyzing the markets for more than a decade and we remain convinced that leveraging on analysis such as correlation of assets or trader sentiments can often provide useful insights. This is thus the basis of our signature knowledge based approach towards forex trading. Our just released correlation analysis has given possible insights to the market sentiment and hence premium members should log in immediately to review it for their forex trading planning.
The Upcoming Week
In the upcoming week, we are expecting the USA Non-Farm Employment Change. It is likely to be closely monitored as many are anxious about the economic situation of the US. Employment is a fundamental component of the economy as it leads to consumer spending and hence retail sales. A low unemployment rate is an indicator of a healthy functioning economy. The US Non-Farm Payroll is data released by the U.S. Bureau of Labor Statistics on a monthly basis that represents the total number of employed US workers, excluding the following employees:
– general government employees
– private household employees
– employees of nonprofit organizations which provide assistance to individuals
– farm employees
As it is a large section of the US economy, it has significant potential to affect price action and especially so if developments are not as expected.
The Bottom Line
It is imperative that we continue to monitor the global and region developments of the various ongoing challenges. The COVID-19 crisis continues and the stand off between the US and China continues to remain a possible source of volatility, especially when a number of the major points are economic in nature. Brexit negotiation developments should be monitored too. Furthermore the COVID-19 situation is escalating in a number of countries. These fluid situations have the potential to send the EUR/USD either way.
It is important to follow an economic calendar as your forex trading plans may be impacted due to shifting sentiments. Members do log in to your dashboards for the economic calendar. You should also review the latest Major Currency Pairs, USD Index, Gold, Brent Oil Analysis and Correlation Analysis to complement your forex trading plan.
Traders should always practice proper money management and seek to understand the underlying tones for the market. May the pips be with you!
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