Good day forex traders.
How are you in this new year? Hope you are all ready to make this year a super pips-ful year.
It is time to take a look at what the EUR/USD has been up to. In our 2019 outlook we mentioned that both sides of the Atlantic will be in a situation of who is the weaker economy to be punished by investors.
Looking at the EUR/USD weekly chart above we noted that the currency pair attempted to reach the 1.16 region. It has since failed and is currently testing the middle bollinger band resistance.
Bollinger Bands Insights
I always found bollinger bands to be a great technical indicator and once again it has proven me right.
Should the EUR/USD clear the middle bollinger band, an attempt on the 1.16 is likely. A longer term bullish target will be the upper bollinger band.
If the bears return, 1.14 will be an immediate support followed by the lower bollinger band / support region of 1.12.
One Slows While Another Quickens
All seems likely that the pace of interest rate hikes by the US Federal Reserve is slowing down. As such, we may see an increase in USD bearish sentiments ( which translate to bullish pressure for EUR/USD ).
Across the Atlantic, the European Central Bank reaffirms that it will stop its quantitative easing measures in January. With the bond buying measure stopping, the monetary situation will tighten. With supply going down, demands are likely to provide an uplift for the euro currency.
We know that investors usually favour the currency with a higher interest rate and hence we may see bullish sentiments for the EUR/USD. Members can log into their dashboards to view the forex sentiments analysis so as to monitor for possible change of trends.
Not The Only Equation Though
Having said so, the financial market is a complex machine with many various under currents. We need to consider other factors such as political developments. Ongoing situations for Brexit, Italy, France remain very much influential on sentiments. Same goes for the US. The current partial government shutdown is the longest ever. Trump has not shown any indication of backing down from his demand of budget for the border wall with Mexico.
The Week Ahead
Important events are due this week such as a speech by the European Central Bank president and G20 meetings. While liquidity has picked up, always prepare for unexpected developments with proper money management.