Good day readers.
How was your forex trading week? I hope you made a green harvest of pips.
In the previous EUR/USD forecast we noted that the currency pair had a wide range for the week. It spiked and nearly reached the 1.18 medium term bullish target as mentioned. It then retreated and was testing the bearish resistance of 1.12 as expected. We note that currency pair remained in a consolidation phase and hence it was not possible to determine the short to medium trend. It was crucial to remain prudent and deploy proper money management. Topside resistances were 1.18 and 1.22. Supports were likely to be at 1.12 , 1.11 and 1.10.
Looking at the EUR/USD weekly chart above we note that the currency pair was bearish for the week and it remained in a consolidating phase as expected. It was testing the support region of 1.12.
I would like to draw your attention to the bollinger bands that I feature in my charts. It remains my indicator of choice as it never fails to provide areas of possible interaction. As you can see the EUR/USD is now at the middle bollinger band and hence it is a possible center of pivot. The bands have stabilized and it is indicative of a consolidation phase. Keep a look out for the top and bottom regions which are 1.15 and 1.08 respectively. Of course we would have numerous immediate support and resistance zones in the middle.
The US Non-Farm Payroll was not as good as expected but nonetheless the unemployment rate dropped to 5.1%. This is likely to inject some positive sentiments into the markets.
Across the Atlantic, the European Central Bank indicated the possibility of further quantitative easing measures. This is likely to dampen sentiment towards the euro currency. Furthermore the ECB noted downside risk to the inflation rate and this gave investors concern as this may indicate sluggish economic activities in the euro area. Among the economic data releases, we note that German factory orders declined more than expected in July.
In times of consolidation like now, monitoring the daily sentiments is crucial as the currency pair sways from side to side.
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