Good day forex traders.
How was your week? I had great fun singing the other day. I think singing is a great way to shut off the outside world for a temporary refuge, koala style!
In the previous EUR/USD forecast we noted that the SMAs were still bearish. Having said so the SMA 20 had signs of a slow down due to the consolidation in the region. Fundamentally we noted that Spain had decided to seek international assistance regarding it’s ailing banks. China scores a goal with improved economic performance thus a short term rally might happen.
Looking at the EUR/USD chart above, we noted a sharp dip followed by a bullish climb.
SMA 20 = Flat
SMA 50 = Bearish
The SMA 20 is now flat and this may indicate that the bearish momentum has paused for a breather. The week was almost flat with a slight bullish upside only. In view of the Greek elections, technical analysis is probably a wild guess. Possible bullish target is 1.28 and bearish target is 1.24 / 1.245.
An important event, the Greek polls is happening this weekend and the short – medium term outlook of the markets will depend heavily on this.
The possible outcomes may be :
1) Greece decides on a pro austerity government.
It is generally believed that if this happens, the markets may experience calm or even a short term rally due to relief. However social strain may plague Greece due to the severity of the austerity measures.
2) Greece decides on an anti austerity government.
Many economists and analysts believed that Greece will have no choice but to exit the Euro Zone should austerity measures be rejected. Without the bailout plan, Greece will effectively be unable to fulfill the requirements of Euro Zone membership. A default is likely to happen causing further turmoil to the global markets. Other debt laden countries such as Spain and Italy may be implicated.
3) Greece ends up having no majority to form a government.
Should this happen, we will likely see continued risk aversion as markets face apprehension of further developments. Other debt laden countries such as Spain and Italy may face further strains.
There is a G20 meeting tomorrow and the Greek polls outcome and Euro Zone budget deficit crisis will likely be the main topics. It was reported that the German Chancellor and French President will be leaving for this summit only when the Greek polls result is out.
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