Good day forex traders and koalas.
Are you having a good weekend? I love weekends as it gives me time to rest, spend time with my family and of course, read up on forex! We must remember that it is crucial to understand the markets for forex trading.
In the previous EUR/USD forecast we noted that the resistance of 1.36 was hit and if bullish momentum continued we might see 1.38. Economic data for the Euro Zone was generally positive, adding to the risk on sentiments.
Looking at the EUR/USD daily chart above we note that the bullish momentum stopped. The currency pair reached its peak at 1.36++ and dipped hard from immerse bearish pressure. The immediate support will be the previous consolidation region of 1.3320. As usual monitor the EUR/USD at the start of the new trading week.
The Euro Zone ministers had a summit this week and after much debate came to the conclusion to reduce budget in an effort to complement austerity. This came as a compromise with countries who were pushing for growth.
While the recent EUR/USD rally brought about much optimism on how conditions were improving, I mentioned always that we must always consider forex trading in totality and hence economic factors come into play. Often countries will be worried if the currency is considered too high for the current economic state. This is because with a higher currency value, exports performance may be affected as markets source for cheaper alternative. It is in this light that the president of the European Central Bank ECB commented on the policy makers’ concern on the recent rally of the euro currency affecting economic recovery and dampening inflation.
As we can see apparently the market has taken the cue and the EUR/USD had since corrected.
Next week will bring us a number of economic meetings and releases. Be on a lookout for comments that may move prices.