Good day forex traders and readers.
It is the last month of the year and I hope everyone is on their way to finish the year well. I wanted to provide a quick update on the situation of the EUR/USD.
In the previous EUR/USD forecast we noted that the bearish momentum remained and a lot will depend on the ability of the support region of 1.24 to hold against the price action. We had to observe closely.
Looking at the EUR/USD hourly chart above we note that the currency pair has since pushed below the 1.24 line. As mentioned earlier, 1.24 is an important support and hence the current price action below this region is indicative of a bearish momentum towards 1.22.
We need to continue to observe the price action and see if the EUR/USD will remain below 1.24 as the bullish momentum may attempt a recovery.
The current situation for the EUR/USD is not unexpected if one is tuned to the fundamentals. As mentioned a number of times, the market often favors currencies with a higher interest rate. With the euro facing continued deflation risk, the European Central Bank probably needs to keep interest rates low for some time. On the other end, the US Federal Reserve is facing increased indications of a strengthening economy and hence needs to support appropriately. Market speculation of an interest rate hike is increasing.
Do be mindful of the US Non-Farm Payroll this Friday. A positive development may result in US dollar strength.
To get the most out of TheGeekKnows, join our free email mailing list. Get forex updates, forecasts and warnings! Join on the right side bar.