Good day forex traders and readers.
I had a reader who wrote to me and I wanted to take this opportunity to caution all again. Seeing the EUR/USD creeping up before the US Non-Farm Payroll, he bought an oversized position. He believed that the EUR/USD would climb. When the trading day came to a close, he had suffered a margin call.
No matter how confident you are, never ever omit proper money management. Unexpected developments may happen and one margin call is enough to ruin your forex trading account.
In the previous EUR/USD forecast we noted that the currency pair was parked at the support of 1.23. There was considerable short term support at that level and an economic event might be needed to tip the momentum further. The bearish target remained at 1.22
Looking at the EUR/USD weekly chart above we note that the currency pair was bearish for the week. As mentioned previously, being under 1.24 indicates possible bearish momentum and indeed the EUR/USD went further and dipped below 1.23.
It is now just tens of pips away from our bearish target of 1.22. Congratulations to our readers who nailed this move. While we cannot predict 100% in forex, 1.22 may offer significant support and hence it is prudent to observe the price action in this region. Any bullish correct will no doubt target 1.24.
The US Non-Farm Payroll was a pleasant surprise for the U.S. economy. Number of jobs created was higher than expected and this gave a boost to sentiments. It was also reported that earnings were generally up, further indicating that the economic recovery is moving along.
I mentioned previously that any dovish stance by the European Central Bank is likely to cause further weakness in the euro currency. A few readers wrote to say that the currency pair climbed after the ECB interest rate event despite indications of upcoming monetary easing. However I have said many times that we are often presented with knee jerk reactions that may be opposite at first. Looking at where the EUR/USD is now, this instance is indeed a classic example. I do hope that you my dear readers approach forex with understanding that I always encourage. I have been with this currency pair for 6 years now and I am still learning everyday!
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