Good day forex traders and readers.
Welcome to another EUR/USD forecast. It is almost the end of the trading week and it is time to lock in your profits 🙂
In the previous EUR/USD forecast we noted that the currency pair was facing a crucial support region that had in previous instances held up against bearish pressure. From a fundamental point of view, the continued speculation on US Federal Reserve quantitative easing tapering brought about the US dollar strength.
Looking at the EUR/USD daily chart above we note that the currency pair had an unexpected bullish spike. The bullish momentum was a strong one as it broke through various resistances to test the 1.32 region.
The EUR/USD is now approaching the line of 1.3 and it would be important to note if the currency pair would go below 1.3. If it indeed does so, we might be looking at 1.2880 as the next bearish target.
The FOMC meeting minutes were released and the general stance of the various US Federal Reserve official were observed to be of a requirement to see more improvement in the US economy before any tapering would be considered. This would be a contrast to the markets interpretation earlier on which resulted in the equities sell off and US dollar strength.
US Federal Reserve chairman Ben Bernanke commented that inflation and labor markets signaled that more US Federal Reserve stimulus is needed and the outlook contains significant risks that require monitoring. He also mentioned that the Fed would not raise the Fed Funds rate until the unemployment rate falls well below 6.5%.
The markets are probably taking the above as a reversal of what was speculated previously. The US dollar had since then fallen in value against various currencies. We would need to continue monitoring sentiments.
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