Good day forex traders and readers.
Welcome to the weekly EUR/USD review and I hope you had a great forex trading week. We are now into the second half of the year and here’s to our continued success for 2013!
In the previous EUR/USD forecast we noted that continued bearish momentum would see us targeting the extended bearish target of 1.2980. The ripples from the US Federal Reserve stance on tapering quantitative easing continued to inflict negative sentiments causing sell offs from most risk assets.
Looking at the EUR/USD daily chart above we note that the currency pair did test the 1.2980 region as expected.
1.2980 will probably be a crucial support region. Should the EUR/USD breach the support, we may be looking at a bearish target of 1.2880. This would also coincide with the lower bollinger band.
Any bullish correction would likely take us to the 1.3120 resistance region.
The S&P 500 ended higher this week as the markets reconsider their adverse reaction to the suggested quantitative easing tapering plans. Furthermore better than expected consumer confidence and pending home sales in the US encouraged investors and their sentiments towards the US.
As the US data continue to show signs of strength, traders may be pricing in the inevitable tapering of stimulus and hence the strengthening US dollar.
Over across the Atlantic, the opposite seems to be happening as the European Central Bank ECB president mentioned that the ECB is continuing it’s accommodating policy and would be prepared to act to support the Euro Zone economy. Such a policy would often lower the value of it’s currency due to the flood of liquidity.
This new week brings the US Non-Farm Payroll and hence do pay close attention as we observe if the US economy remains strong.
Refer to the weekly pivot data for the EUR/USD below for some possible indications of support and resistance.
R3 1.3586 R2 1.3483 R1 1.3303 PP 1.3200 S1 1.3020 S2 1.2917 S3 1.2737