Good day forex traders and readers.
Did you make money from the EUR/USD this week? I sure hope you did. Do remember that in forex trading there is no get rich overnight magic. Slow and steady wins the race.
In the previous EUR/USD forecast we noted that a downside bias continued to plague the currency pair. Close monitoring must be done though as immediate supports would strive to halt the dip. Over in the Euro Zone, we saw France’s rating cut by S&P, dampening sentiments. The European Central Bank interest rate cut would no doubt reduce interest in the euro currency too.
Looking at the EUR/USD daily chart above we note that the currency pair turned bullish for the week and is now testing the green resistance region we marked last week. Once again this shows that support and resistance based trading does has it’s merit 🙂
Besides the immediate resistance faced by the currency pair now, the middle bollinger band is also functioning as a resistance.
Observing the entire technical chart shows you the sideways nature of the EUR/USD and hence it will be a challenge to predict a trend. Hence my advise would be to trade with the market and not go against it. Make use of the green resistance and red support regions that I have marked.
This week brought about a number of interesting developments that may give us a clue about the direction of the currency pair.
The European Union was reported to have commented on various aspects of the economies of Germany, Spain and Italy. It believed that Germany has not done enough to increase domestic consumption. For Spain, the concern is of the deficit target of it’s budget and lastly there is worry that Italy may not meet it’s debt reduction commitments. The unemployment rate of the region remains at a record high of 12.2%.
Across the Atlantic, incoming US Federal Reserve chairperson Yellen mentioned that economic stimulus will continue as long as needed to ensure a strong recovery. This brought about mixed feelings from investors as they speculate if this meant that the tapering of the quantitative easing will not happen soon now.
Next week bring a number of economic events such as ZEW Economic Sentiment for the Euro Zone, IFO Business climate for Germany, the US FOMC meeting minutes and more. Volatility may increase and hence do ensure your proper money management.