Good day forex traders and readers.
It is time for another weekly edition of the EUR/USD forecast and it had been an interesting week indeed. The bullish twist was rather unexpected and I hope no one was caught.
In the previous EUR/USD forecast we noted that the currency pair had a slight bullish bias. We noted that 1.38 might be the next strong resistance and from a fundamental point of view, there was nothing economically impressive released from the Euro Zone for the week.
Looking at the EUR/USD daily chart above we note that the currency pair was initially bearish and then unexpectedly turned bullish towards the end of the week. This is the reason why I always remind our readers that proper money management is very crucial for forex success.
The 1.38 region is usually a strong resistance and indeed the EUR/USD had not cleared it decisively. Should the bullish momentum continue, the next resistance is likely to be 1.3880.
Any bearish correction will likely see an immediate support at the 1.376 region. An extended bearish target will be 1.368 / 1.36.
The Euro Zone inflation for the month came in at 0.8% which was better than the expected 0.7%. This probably eased investors who were concerned about a deflating Euro Zone. There were also speculations that this will reduce the possibility of an interest rate cut by the European Central Bank.
During a speech by the new US Federal Reserve chair Janet Yellen, slow wage growth was mentioned together with the acknowledgement that it suggests that more needs to be done. The market probably saw this as a dovish stance towards the US dollar and it pushed the EUR/USD higher.
There are a number of important economic event next week and hence prudent trading is advised. Towards the later half of the week, we have the European Central Bank minimum bid rate announcement followed by the US Non-Farm Payroll data release on Friday. Unexpected developments will likely trigger volatility.
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