Good day forex traders and readers.
Welcome to the weekly EUR/USD forecast review and I hope the weekend is thus far excellent for you. The weather is pretty good over here for me and how else than to enjoy it together .. With some forex charts! Ha!
In the previous EUR/USD forecast we noted that the currency pair was receiving some bearish pressure. The strong resistance of 1.36 laid ahead. The US government shut down and upcoming debt ceiling crisis continued to be a drag on the sentiments.
Looking at the EUR/USD daily chart above we note that the currency pair was over all bullish and had breached the 1.36 resistance monetarily. It had since fell back towards the mid 1.35 as bearish pressure emerges towards the last day of the week.
With the lack of noticeable risk aversion affect for now, it is possible that the medium bullish trend will continue. Can you spot the bullish trend line? Do continue to monitor the 1.36 resistance. Should risk aversion finally strikes, the immediate support is probably 1.3480.
For the folks who are new to the site, I mentioned many times that investors do not like sovereign issues and especially not when it concerns the world’s reserve currency. In recent times, the US dollar has dropped in value with no probable end in sight. I previously thought that we might see some risk aversion pushing up the demand for the US dollar but it was hardly the case.
The US federal government shutdown continues as the democrats and republicans fail to resolve their differences. The reduced US governmental economic activity will no doubt affect the US economy. This threatens to derail the fragile recovery.
Another impending crisis will be the hitting of the US debt ceiling. This is reported to be October 17 and all borrowing by the US government will cease then unless the debt crisis is risen. This seems to be adding onto the confidence hit of the US dollar that we are witnessing in the currencies market.
As the majority of the US economic data reporting remains suspended, do trade carefully as it is akin to walking in the dark. I remain particularly wary of any risk aversion.