Good day forex traders and readers.
Welcome to another weekly EUR/USD forecast and I hope your trading week was fine. The US Non-Farm Payroll was as usual a high risk event and some readers wrote to me that they had suffered a margin call. 🙁
In the previous weekly EUR/USD review we noted that any bearish momentum would target the bearish support of 1.2880. While the US Federal Reserve considered tightening policies, the European Central Bank commented that it remained supportive of economic recovery and growth.
Looking at the EUR/USD daily chart above we note that the currency pair did test the 1.2880 region and beyond. The bearish pressure was overwhelming, solidified further by the US Non-Farm Payroll.
Further bearish momentum would target 1.2720 region. Having said so, if you were to switch to the weekly EUR/USD chart, the bottom bollinger band would probably function as a strong immediate support as it had shown such inclinations previously.
Any bullish correction would probably see 1.2940 and 1.3.
The US Non-Farm Payroll came to be better than expected. The number of jobs created exceeded estimates. This remains a good sign for the US economy as it suggests that business confidence is picking up and hence the increased hirings.
As far as the EUR/USD is concerned, this might mean that it would receive further selling pressure as the US dollar strengthens. The US Federal Reserve chairman Ben Bernanke mentioned the possibility of quantitative easing tapering should the US economy remained progressive. Investors speculate that this might even lead to the possibility of an interest rate hike and hence demand for the US dollar is increasing. Furthermore with the continued performance of the US equities, traders are also buying the US dollar so as to invest in the US economy.
The Euro Zone on the other hand remains plagued with sovereign issues such as in Portugal and also high unemployment rate such as in Spain. The European Central Bank continues to pledge accommodative support and thus reduce the value of the euro currency due to excessive liquidity.
Refer to the weekly pivot data for the EUR/USD below for some possible indications of support and resistance.
R3 1.3189 R2 1.3146 R1 1.3077 PP 1.3034S1 1.2965 S2 1.2922 S3 1.2853