Good day forex traders and readers.
Welcome to our EUR/USD forecast for the new week. I hope you are all geared up and ready to make some pips !
In the previous EUR/USD forecast we noted a possible bearish target of 1.3240. While the medium term remained bullish, caution was advised as the FOMC event might hold surprises regarding the quantitative easing program of the US.
Looking at the EUR/USD daily chart above we note that the currency pair did hit the bearish target of 1.3240. A major bearish sell off brought the currency pair beyond and is now approaching for a test of the support region of 1.3080.
We might be expecting a broad range of consolidation for the EUR/USD in this region. Any bullish pressure might bring us to 1.3240 while continued bearish momentum might target 1.2980.
The US FOMC brought a major blow to the global sentiments as US Federal Reserve chairman Ben Bernanke signaled the beginning of the end of the quantitative easing program should the US economy continue to deliver progress. Many investors are not confident about the removal of stimulus and hence are adopting a risk aversion stance towards their portfolio.
I would expect the upcoming days to be rather sentimental in nature as far as trading is concerned. Best approach in my opinion would be to observe the risk assets such as equities and determine the overall sentiment accordingly.
On a side note, we should also observe the gold price as we could gain insights to possible USD strength due to the loose correlation these two assets share.