In the previous EUR/USD forecast, we noted the relative ease of the EUR/USD’s successful attempt to head below 1.18. That was indicative of a significant bearish pressure. Having said so, the strong technical and sentiment support of 1.16 laid ahead and it could offer a sizable challenge to any continuation of the bearish momentum.
Looking at the EUR/USD weekly chart above, we see a bullish week for the currency pair. As mentioned, the 1.16 region did put up a challenge and the bearish momentum did not stand a chance. The EUR/USD has since climbed above 1.17, making it the immediate support for the moment.
The bollinger bands continue to narrow as expected and this will likely urge further consolidation price action. The major support and resistance levels are 1.16 and 1.18 respectively.
The COVID-19 pandemic continues to inject uncertainty into the financial markets. The global death toll is now over 1 million. Hard hit industries such as tourism face increasingly dire situations and governmental institutions are doing their best to prevent a full breakdown. US President Donald Trump has also been tested positive for COVID-19 and many are monitoring this development closely. As the head of the global economic power, volatility may occur if any unexpected development happens. Investors are sensitive to sovereign developments as any political changes may have significant impact on the country’s economy and currency.
The US-Non Farm Payroll came out weaker than expected. It reported 661k jobs added instead of the expected 900k. Having said so, the US Unemployment Rate was reported to be better than expected, falling to 7.9% instead of the expected 8.2%. As the figure progresses towards pre pandemic levels, positive sentiment towards the US economy is likely to be increased. 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 while a high unemployment rate suggests a challenging economic climate.
We just released the latest forex correlation analysis for our premium members and are pleased to note that it remains consistent compared to the week before. Such situation is good as it gives possible insights to the market sentiment. Premium members should log in immediately to review it for their forex planning.
The Upcoming Week
In the upcoming week, among other economic releases, we are expecting a number of speeches from the ECB President Lagarde and Federal Reserve Chairman Powell. Speeches may reveal new insights to economic policies or contain a question and answer segment that at times go into unscripted topics resulting in unexpected developments and volatility.
The Bottom Line
It is imperative that we continue to monitor the global and region developments of the various ongoing challenges. The COVID-19 situation is escalating in a number of countries. The US Presidential Election is approaching and US President Donald Trump is undergoing treatment for COVID-19. 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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