Good day forex traders.

We are on to the second day of the trading week and i hope you are now in the green 🙂

In the previous EUR/USD forecast review by Masoud, it was noted that a bearish trend remains likely. Both from a technical and fundamental aspect, few reasons could be found for any bullish activity.

Technical Analysis

The EUR/USD is currently testing the 1.28 region. Usually a strong support and resistance line, the strength of the bearish momentum will be judged now.

SMA 20 = Bearish

SMA 50 = Bearish

Both SMAs are now bearish and this suggests a strong momentum in play. A closure below 1.28 will probably set the stage for further bearish advancement.

Fundamental Analysis

Breaking news, certain politicians from Greece were reported to have announced that polls would be held again due to the failure to form a government.

Equities have fallen and the Euro currency weaken.

I often mention that investors do not like political issues and this is currently being reflected in the markets. Should Greece go to the polls again, more uncertainty will be raised and time wasted. Should a pro austerity government fail to form, the bail out will probably be cancelled. Greece would probably default and exit the euro zone.

I would like to remind everyone that this goes beyond Greece. If Greece really leaves the euro zone, it will open up a can of worms and bring up the question of who’s next.

Spain is struggling with it’s banking issues and the bond markets are punishing the country with high interest rates demanded. This causes refinancing challenges.

A report mentioned that US assets went up in demand due to risk aversion.

Trade Safely

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EUR/USD Forecast Review 15 May 12

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