Good day forex traders and readers.
It was a busy week for me and I hope yours was better. Preferably with a good harvest of pips of course 🙂 The EUR/USD was rather transparent with it’s intention thus making trading decisions simple.
In the previous EUR/USD forecast we noted that the currency pair bounced up from the previous low and was resting in the 1.25 region. It was too early to ascertain if it was a long term bullish correction or a minor pullback. Currency pairs do not move in a straight line. The immediate resistance was likely to be 1.26 while support would be at 1.24.
Looking at the EUR/USD weekly chart above we note that the currency pair has turned bearish again for the week. It tested the critical support of 1.24 again and is now below it.
The return of the bearish momentum is indicative of the underlying fundamental themes again. Should the EUR/USD continue to push down, we will be expecting at test of the 1.22 support.
It is crucial to observe as a breakdown will suggest the end of the current consolidation phrase.
The markets continue to punish the euro when the opportunity arises. The president of the European Central Bank continues to indicate the possibility of stimulus action to support the euro zone economy. There seems to be an increasing belief that the inflation outlook of the region is falling. With it comes the increased possibility of stimulus action and hence the weakening of the euro currency.
In contrast the U.S. economy is gearing up for monetary tightening and hence we can expect rising pressure for the value of the USD. With this, there is a pull and push momentum contributing to the weakening stance of the euro.
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