Good day forex traders and readers.
Welcome to the weekly forecast review of the popular EUR/USD currency pair. As long time readers will know, I always love the weekends as it gives me the time to observe the technical charts. Forex is never an easy way to earn money!
In the previous EUR/USD forecast we noted that further bearish pressure would see the possibility of 1.34. The new trading week would be crucial as we were expecting the US Non-Farm Payroll and European Central Bank minimum bid rate announcement. Both economic events are very influential towards the EUR/USD.
Looking at the EUR/USD daily chart above we note that the currency pair had a bearish week. It could not climb above the immediate resistance and was brought down by bearish pressure.
Should the bearish momentum continue, we may be looking at the regions highlighted red. The immediate support is 1.33 while an extended bearish target may be 1.31.
If the EUR/USD attempts a bullish recovery, areas to watch out for are highlighted in green. I often use support and resistance levels to navigate my charts and I hope you feel it useful too. Immediate resistance will probably be 1.34 followed by 1.35.
Overall the trend seems to be bias towards the down side. The EUR/USD chart seems to look like a head and shoulders of sorts. If indeed so, then more bearish momentum may be due.
I warned about the European Central Bank minimum bid rate last week and indeed it resulted in an unexpected interest rate cut. Investors are often concerned about interest rate cuts as it will inevitably reduce the demand and value of the currency. As we observed, a knee jerk reaction has already occurred.
French was also downgraded by S&P due to weak economic growth, high unemployment and government spending constraints. Being the second largest economy in the Euro Zone, this will probably result in negative sentiments towards the region.
Across the Atlantic, the week was a good one for the US. The US Non-Farm Payroll came in better then expected, creating more jobs for the American economy. This will increase demand for US assets.
More economic data releases are scheduled next week and let us observe closer for the impacts on sentiments