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EUR/USD Weekly Forecast: EUR/USD faces 1.22 again

The week ended at the 1.22 region.


Technical Analysis

In the EUR/USD weekly chart above, we see a failure to maintain a beachhead above 1.22. The currency pair’s bullish ambition was blocked by the upper bollinger band.

Starting from this forecast, you will see additional red lines plotted on the candlestick chart. In our field research, we noticed that certain regions are often areas of immediate support and resistance. To provide more value to our readers, we are including it in our charts.

These are the lines in the immediate vicinity for the week ahead.

Possible areas of resistance
Upper Bollinger Band

Possible areas of support
Middle Bollinger Band

It is important to note that the currency pair failed in its previous attempt in late 2020 to decisively breach 1.22. All eyes would be on the EUR/USD for the week ahead.

Sentiment Analysis

Looking at the S&P 500 chart above, we see that equities are still healthy. Nothing indicates the end of risk-seeking appetite as the value is still near the top. Hence we will probably see minimal upside contribution to the USD from traders seeking safer assets.

The Cboe Volatility Index is now above 16. As an indicator of volatility, this suggests that volatility has decreased. We are warier of big changes in the index, but slight changes as such can provide good peripheral information.

I want to bring attention to the worse than expected US Pending Home Sales. It reported -4.4% instead of 0.6%. This is a huge downside surprise and the previous releases since Feb 2021 were all worse than expected.

The purchase of a house results in economic activities. Renovation jobs will be created for construction workers, the various subcontractors, and services associated with new ownership such as power, water, furniture, and so on. This continued poor performance may suggest a certain weakness in the US economy. Close monitoring is advised.

The Week Ahead

There are a number of important economic events this week. I highly encourage you to read through and learn about these events. This helps improve your understanding of the market sentiment.

The US Non-Farm Payrolls is due this week, and it is a major barometer of the US economy. Expect significant volatility if anything unexpected happens. The forecast is an addition of 670k jobs. Investors and analysts will monitor this event closely.

Find below a number of the economic events (not in chronological order).

EUR German Final Manufacturing PMI
USA ISM Manufacturing PMI
USA ISM Services PMI
A Purchasing Managers’ Index is a survey of purchasing managers and is important as the sentiment of purchasing managers is a leading indicator of economic health. A healthy sentiment suggests that an economy is moving along well, while a cautious sentiment may see fewer business activities because of prudence.

USA ADP Non-Farm Employment Change
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.
ADP’s statistics are based on the payroll data of approximately 400,000 U.S. business clients. Therefore, it is viewed by many as a possible early indication of the US Non-Farm Payroll result.

USA Crude Oil Inventories
This gives insight into the supply and demand of oil, which may tell us more about the economy’s health. An expanding economy typically uses more oil, while a contracting one may result in significant excess.

EUR ECB President Lagarde Speech
USA Fed Chair Powell Speech
Speeches may reveal new insights into economic policies or contain a question and answer segment that at times go into unscripted topics resulting in unexpected developments and volatility.

USA Average Hourly Earnings
Consumer earnings is important because of its upstream impact. With more earnings comes possibly increased consumer spending. This translates to revenues, leading to employment and business expansion.

USA Non-Farm Employment Change
USA Unemployment Rate
USA Unemployment Claims
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 basically 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

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