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EUR/USD Forecast October 28



Good day forex traders and readers.

Once again it is time for us to evaluate the EUR/USD and to learn from it. Learning is a life long process and yes it applies for forex trading too!

In the previous EUR/USD forecast we noted that the currency pair was bullish and the failure of the resistance of 1.36 would probably suggest an extended target of 1.38. From a fundamental point of view, the resolution of the US debt ceiling crisis and government shutdown brought about positivity to the markets. This probably spurred risk taking activities.

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Technical Analysis

Looking at the EUR/USD daily chart above we note that the currency pair did hit the extended bullish target of 1.38. I love it when my chart works. Nothing is more wonderful than seeing the currency pair unfolds according to plan on the chart. And of course seeing my readers make money too!

The 1.38 line will be the resistance to watch out for in the upcoming trading week. If it fails, I will be expecting a possible extended bullish target of 1.4. This region is likely to be a strong resistance.

Any bearish correction is likely to target the Immediate support of 1.3680 and 1.3620.



Fundamental Analysis

We are presented with a number of weaker than expected economic releases this week from both sides of the Atlantic. The US reported an increase in unemployment claims and lower consumer sentiments. As the employment market and consumer sentiments are both good indicators of the economy, any disappointment pertaining to it will often affect sentiment. Over at the Euro Zone, we noted that German business sentiments and factory orders were down too. Having said so, the effect on the Euro currency was apparently muted and investors probably saw it as volatility rather than an indication of German economic weakness.

An increasing number of economists are believing that the tapering of the US Federal Reserve quantitative easing program will not happen soon due to the recent government shutdown’s effect on the economy. With the continued massive supply of the US dollar flooding the market, bearish pressure will remain.

I was reading reports on the margin levels of equities trading on the S&P 500 and it was highlighted that the amount of borrowed money floating in the equities market has reached the levels of the previous financial crisis of 2008. As always, risk only what you can afford to lose and you will not be overly worried should a global financial crisis hit again. 🙂

Trade safely.

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