Good day forex traders and readers.
Welcome to a special edition of our EUR/USD forecast. I often come across readers asking me if the EUR/USD should be bearish or bullish and how long would it last. I find this approach something we need to address. The market often reacts based on sentiments. This is especially so on a shorter time frame. Hence it is impossible to forecast with laser precision on how the currency pair would react at any given point.
Having said so, we should strive to understand the tell tale signs of the market. Just like when one sits aside on a busy day of a real market, you can observe which products are popular, which are not. Hence it is crucial to understand the developments of the market. You can read up in the media and also at the economy section of our website.
Looking at the EUR/USD weekly chart above, we are taking a longer term approach to observe the underlying trend of the currency pair.
Since the beginning of the year, we noted on the reduced range of the currency pair. 2012 had more extended trends. 2013 seems to be filled with trend reversals as the market alternative between demand for the euro currency and the US dollar.
From the above, a number of useful assumptions may be considered. One of which will be that long term trend traders would probably be disappointed. Swing traders would probably be able to take advantage of the flip flops we seen. Medium term trend traders would most likely do well too.
There is no clear bullish or bearish trend and this is expected as the market remains apprehensive towards development on both sides of the Atlantic. Whichever economy that appears to be more promising at that point of time would simply receive demand.
I expect this to go on for sometime and urge all to remain connected to the market rather then just short term developments.