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EUR/USD Forex Forecast Weekly Review 23 April 12

Good day forex traders.

I hope everyone is having a great weekend. Did you manage to assess the risk of your running positions you intended to leave over the weekend? With all the G20 and IMF meetings over this weekend, market expectations may change and a weekend forex gap may happen. 

In the previous forex forecast review of the EUR/USD, we noted that both SMAs were flat and that indicated possible uncertainty. Fundamentally we noted that China’s growth had slowed and a number of US Federal Reserve heads were inclined towards a low interest rate for the US economy’s benefit. Risk aversion might be headed our way.

Technical Analysis

1.32 remains a strong region of resistance. The EUR/USD failed to gain much ground above it.

SMA 20 = bearish
SMA 50 = turning bearish

With the SMAs not indicating a bullish momentum for now, 1.32 may prove to be a tough resistance for now. Regardless, the SMA 200 which is indicative of long term momentum continues to be bearish and is approaching the price action. It is usually a strong support and resistance region and we should pay close attention to it.

Fundamental Analysis

Economic data from both sides of the Atlantic were generally positive this week. US Retail Sales and German ZEW Economic Sentiment were better than expected. This probably gave to boost to risk seeking activities however my personal opinion is that the weakness of both economies remains a critical issue to be solved.

Spain bonds costs have risen and austerity cuts are causing social tension. Years down the road, we will look back with hindsight on whether did these austerity cuts which cause extreme strains to broken economies helped improved the situation or created more problems. The euro zone will continue to face complex difficulties as individual countries prosper or struggle with their own unique economic situations. To get a feel of what this means, imagine taking part in a 3 legged race only that your partner has little stamina.

Over in the US, the focus on economic stumbling blocks is off due to the political and economical drama of the euro zone but a close look at key indicators of the economic health such as housing start ups and foreclosure do not indicate a robust foundation.

Next week brings numerous economic events including the US Federal Funds Rate and it’s accompanying meeting release. Possible clues on quantitative easing may excite the market. 

Trade safely.

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