Good day forex traders and readers.
Welcome to the weekly edition of the EUR/USD forecast. I have been trading the EUR/USD for some time now and the beauty of it is that it is so unpredictable at times. Just when you think that you finally understand what this currency pair is all about, tada ! A new surprise comes along.
In the previous EUR/USD forecast we noted that the currency pair was bullish for the week. We did note a number of resistances and from a fundamental point of view, the Euro Zone remains fragile and the unemployment situation is a cause for concern. Over to the US, the question of quantitative easing tapering remained a mystery as the incoming US Federal Reserve chairman seems to be still taking an easing approach for now.
Looking at the EUR/USD daily chart above we note that the currency pair continued on a bullish path and is approaching the resistance level as indicated in the previous week.
Should the bullish momentum continue, we may expect resistance at the 1.36 region. If that fails, the next extended bullish target will probably be 1.38.
Considering the other direction, I have indicated a number of possible support regions and it is observed that we do have an overlap right below the current price action. Hence this suggests that we may see supportive reactions throughout 1.34. This can be observed too from the previous week’s consolidation price action.
I mentioned last week regarding the importance of the various economic events such as the ZEW Economic Sentiment for the Euro Zone and IFO Business climate for Germany. These events often have a high possibility to influence the price action.
It was reported that the German IFO Business climate rose and brought it to the highest level in over a year. The Swedish confidence report also increased more than expected adding to the positivity towards the Euro Area. I always mentioned that sentiments are crucial to market moves and these events probably contributed to the bullish momentum enjoyed by the EUR/USD this week.
As usual, I want to recommend trading based on the sentiments. We know that while the current sentiments are pushing the euro currency higher, just be on a lookout for the few recurring themes of the euro area. The various bailout programs such as Greece and also the overall high level of unemployment. There are quite a number of economic releases due next week for both the US and the Euro Zone.