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EUR/USD Forecast 13 Oct 14

Good day forex traders and readers.

Welcome to another weekly EUR/USD forecast. I hope you had a great trading week. A few readers were stopped out though due to their short positions. More on that later.

In the previous EUR/USD forecast we noted that the strong support of 1.24 might be the next bearish target but we should not take things for granted as a correction might occur.


Technical Analysis

Looking at the EUR/USD weekly chart above we note that the currency pair did indeed had a correction. This is not unexpected as mentioned in the previous forecast and hence we must always be prepared with proper money management.

The EUR/USD was capped on the upside by the region of 1.28. It is now near the potential support region of 1.26. There is a possibility of the 1.26 region functioning as a consolidation point and hence we should pay close attention to the currency pair.

Fundamental Analysis

It was reported that the US Federal Reserve is concerned that a strong dollar may derail the economic recovery of the U.S. . This probably caused a upheaval of sentiments as investors reacted by shifting away from long USD positions. This was probably reflected by the correction seen. This may be a knee jerk reaction and hence a prudent approach would be to observe the markets early week.

The Euro Zone continues to receive negative impact as the economic recovery is feared to be slipping back into a recession. Furthermore, France is reported to be facing difficulties in it’s economic recovery and hence Standard and Poor’s has cut it’s credit outlook to negative. The fear of deflation and the adoption of stimulative actions by the European Central Bank continues to add on to the weakening pressure of the euro currency.

We must remember that currencies do not move in a straight trend and hence do always be on the lookout for corrections. Failing so will result in many unnecessary stop outs.

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