Good day forex traders.
It is time for a review on the popular EUR/USD. Did you trade over the US Non-Farm Payroll event? I hope you had seat belts on! :p
In the previous EUR/USD forecast we noted that the currency pair was bearish again for the week. It tested and went below 1.14 before recovering above. This was indicative of bearish pressure. If the price action continued to chip away at the 1.14 level, the support might fail and lead to further bearish momentum.
Looking at the EUR/USD weekly chart above we noted that the currency pair closed below 1.14. As forecasted, the continued downside pressure had weaken the resolve of 1.14. Therefore it will be crucial next week because if the EUR/USD fails to climb up again above 1.14, bearish momentum may build up.
Besides the support of 1.14, the lower bollinger band is in the region too. It is likely to add to the support against downside pressure but similarly, the price action has been chipping away at it.
If the bulls manage to regain control of the currency pair in the upcoming week, 1.16 will be the bullish target.
From a fundamental point of view, positive sentiments are high towards the US economy. The US Non-Farm Payroll was better than expected sending a wave of optimism that the US economic momentum has nothing to stand in it’s way. ( Readers subscribed to our premium analysis do log in to your member’s dashboard now. The latest US Non-Farm Payroll analysis is up and it is even clearer there that the data gave the US dollar a boost. )
In the meanwhile, the euro zone continues to be burden by situations such as Brexit and Italy Budget Crisis. Years ago I mentioned that the euro zone with it’s various economies of varying strengths and weaknesses will face challenges in terms of rallying a focused recovery and growth. Indeed it has and is still facing challenges.
German retail sales was much weaker than expected. Being the largest economy in the euro zone, it will probably dampen sentiments. The Italian unemployment rate has also crept up above 10%.
Next week is an important week for the US dollar. The congressional elections will start and the US Federal Reserve is due to release the interest rate and statement on the situation ahead.