Good day forex traders and readers.
Welcome to another weekly EUR/USD review forecast and I hope you are ready for a new week of forex trading. 🙂
In the previous EUR/USD forecast we noted that the currency pair remained capped by the resistance of 1.34 and it would be a crucial point to watch out for. The green middle bollinger band remained as an immediate support. Fundamentally while we observed an economic environment that was bullish for the euro currency, risk aversion from the speculated quantitative easing tapering by the US Federal Reserve probably kept the bulls in check.
Looking at the EUR/USD daily chart above we note that the currency pair tested the major resistance of 1.34 again and went beyond temporarily. The EUR/USD had since eased back below and again we would need to monitor this critical resistance level.
The middle bollinger band did function as an immediate support as expected and I hope you did make use of this opportunity. For the upcoming week, I will still use the middle bollinger band as an indication of a possible immediate support.
From a medium term perspective, the EUR/USD is on a bullish momentum since July. Let us monitor if this will continue. As I mentioned previously, for this to happen the resistance of 1.34 must fall.
Fundamental Analysis
With the Euro Zone out of a recession, the European equities are generally green due to positive sentiments. The EUR/USD is also slowly gaining in value as demand for the single currency unit returns. Having said so we must continue to be on the look out for the situation in the US. Over the week, there were mentions by US Federal Reserve officials of the possibility of a quantitative easing tapering in September. Investors and traders are generally apprehensive to the idea of any reduction of stimulus for fear of an economic slump.
Towards the end of the week, weaker than expected US housing data while detrimental to the sentiment towards the US, did have an apparent positive effect on the overall market sentiments as investors saw this as a development that may deter tapering.
We have quite an amount of economic data scheduled to be released next week for both the US and Euro Zone. I highly recommend a prudent approach.
Trade safely.
