Good day forex traders and readers.
Welcome to another weekly EUR/USD review and I hope you had a great week of forex trading.
In the previous EUR/USD forecast we noted that the currency pair tested the crucial region of 1.34. Should it fail, we might see an extended bullish target of 1.36. In the meanwhile the Euro Zone continued to gain positive attention due to the encouraging economic data released. However there were signs of apprehension towards a September quantitative easing tapering by the US Federal Reserve.
Looking at the EUR/USD daily chart above we note that the currency pair attempted to test 1.34 again but failed. As I mentioned previously, this is a crucial resistance and it effectively caps any further bullish advance.
As the bollinger bands tighten due to reduced volatility, the middle green band is functioning as an immediate support for now. Further bearish pressure may target the support of 1.32.
Equities of the Euro Zone are generally rallying as the exit from it’s history longest recession is causing positive sentiments among investors. Having said so I personally think that more work needs to be done as other factors of the economy such as unemployment rate remains high for the euro area.
While the above situation should cause an uplift in the demand / value for the euro currency, the EUR/USD remains somewhat flat due to a counteracting pressure. The US dollar is receiving attention too due to the improving US economy and also sentimental risk aversion. Some investors are concerned that the quantitative easing tapering may happen in September and hence seek the US dollar as a safe haven.
The above delicate situation will probably last until the market receives confirmation on the actual schedule for the US Federal Reserve’s tapering action.
Next week bring even more economic events such as the US FOMC meeting minutes and manufacturing reports from the Euro Zone. Do be prepared for unexpected events as a precaution.