Good day forex traders and readers.
Welcome to the first EUR/USD forecast of 2014. We are on to the 5th year of serving you our dear readers and I can surely say that we have enjoyed every bit of it 🙂
In the previous EUR/USD forecast we noted that the currency pair was bullish. Having said so I cautioned against any commitment as low volume and liquidity conditions persisted. We do not want to be caught with an unexpected move.
Looking at the EUR/USD daily chart above we note that the currency pair unexpectedly made a bearish correction. I hope everyone heeded my advice cause to be caught long with such a dip would be devastating to margin accounts!
The current technical setup comes across as a loose double top chart pattern. We will need to observe carefully how the EUR/USD will react to the pivotal level of 1.36.
The dip of the EUR/USD probably comes across as a surprise to many traders as the Euro Zone is reporting positive economic figures. Across the Atlantic, sentiments are good too as the recent tapering of the quantitative easing by the US Federal Reserve was seen as an affirmation of sorts that the US economy is picking up.
Many speculative reasons have been offered and among them are profit taking and the joining of Latvia which many believe will be a drag on the European Union. Personally I feel that in view of the festive season creating the low volume and liquidity situation, unexpected currency movement is pretty much expected.
As we look forward to a more normalized market participation next week, watch our for important economic events such as the US Non-Farm Payroll due Friday.