Good day forex traders and readers.
Welcome to the weekend edition of the EUR/USD forecast by The a Forex Koala. As I am still recovering from my illness, I spent an amount of time resting and studying the various forex charts. Are you ready for the new trading week? 🙂
In the previous EUR/USD forecast we noted that the currency pair achieved our bullish target. If bearish correction was to happen, we might see 1.36. While the market sentiments were positive, speculated tapering announcement by the US Federal Reserve warranted caution to be taken.
Looking at the EUR/USD daily chart above we note that the currency pair was bearish for the week. It failed to breach the strong resistance of 1.38 and turned downwards.
As mentioned in the previous EUR/USD forecast, 1.36 is a potential bearish target and indeed the currency pair pushed towards this support level in the week.
As we consider the inclinations of the currency pair, the technical chart is forming up to be a double tops of sorts. Do pay close attention to 1.36 and observe if the support will hold.
Ratings agency S&P has downgraded the European Union. This serves as a reminder that while the situation is better nowadays, sustained progress remains elusive. The union consists of many sovereign nations, each with their own economic and cultural characteristics which may complicate matters at times.
The markets seem to be favoring the US now as the announcement of a $10 billion tapering of stimulus measures resulted in a rally of equities. Many see this as a testament to the improving US economy while remaining moderate enough to continue fueling the recovery. The IMF is also raising it’s outlook for the US.
As the markets settle down with regards to the tapering, I advise close observation of sentiments in the markets so as to be certain of the impact.