EUR/USD Forecast 20 May 13




Good day forex traders and readers.

Welcome to another EUR/USD forecast by The Forex Koala. Now I hope you had a good week of trading. Same like the AUD/USD, the EUR/USD was pretty much by the trading plans mentioned last week and with proper money management, you should be a happy forex koala having made some pips 🙂

In the previous EUR/USD weekly forecast we noted a loose head and shoulders formation which could potentially bring the currency pair down to 1.28 plus. We also mentioned that the euro zone continued to face challenges leaving the ECB to maintain easing monetary support. The sentiments are in contrast to a relatively performing US.

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Technical Analysis

Looking at the EUR/USD daily chart above we note that the currency pair did test the 1.28 region and fulfilled the head and shoulders technical chart pattern I mentioned last week. Well I wished that forex goes according to my plan every like this! Ha. Of course this will never happen and hence I hope readers will always have proper money management. Remember I am not here to provide crystal ball predictions but rather to help you understand the forex market!

Historically we do see some consolidations happen here in the 1.28 region but in view of the strong pro USD sentiments, we need to be careful of unexpected momentum. Should the bears push on, 1.26 + is the next extended target.


Fundamental Analysis

The Euro Zone remains relatively pale in comparison to the US economic situation. As the collection of debt laden countries and economic resilient countries strive to progress together as a region, numerous challenges both domestic and international continue to hamper recovery and growth.

Recently a report suggested that the US employment market continues to recover and grow as payrolls were increased in April across 30 US states. ( you can find this report and more at our economy news section ) With a better employment situation, comes along improved spending by consumers and hence a better overall economy. With the recent sentiments shifting in demand of US assets ( probably spurred by the S&P 500 and it’s highs ) we may be seeing currencies being sold in favor of the US Dollar. A word of caution though is that sentiments can change at a moment’s notice and hence always be prepared for unexpected shifts.

Trade safely.

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