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EUR/USD Forex Forecast Review 25 Jan 12

Good day forex traders.

In yesterday’s EUR/USD forex forecast review we noted that SMA 50 was acting as an immediate resistance. Fundamentally we were seeing trouble brewing as bondholders were resisting the request by European finance official to take further losses so as to ease the debt burden of Greece. Risk aversion probably surfaced as the markets were wary of a stall in talks.

Technical Analysis

As seen clearly above, the SMA 50 remains as an immediate resistance. Any hopes of a bullish momentum can only be contemplated after a break of this resistance. Downside area of interest would be the 1.28 – 1.285 region as the SMA 20 is also there.

Fundamental Analysis

The stalled Greek talks remains challenged as it was reported that bondholders are hoping that the European Central Bank may accept some write downs on it’s Greek bond holdings. This was reported to be something the ECB opposes and Germany was reported to share the same views too. The International Monetary Fund IMF however was reported to be keen on the idea that both public and private bondholders share efforts to reduce Greece’s debt.

I mention before that disagreements in economic policy matters often bring about risk aversion and this is apparently evident now.

Trade Safely.

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