Good day readers.
Welcome to our weekly review of the popular EUR/USD currency pair.
In our previous EUR/USD weekly forecast we noted that the currency pair remained in the region of the 1.12 pivot region. The Euro Zone remains challenged in terms of unemployment and inflation. This might increase speculations of further easing by the ECB. The euro currency might weaken if supply increases due to easing measures.
Looking at the EUR/USD weekly chart above we noted that the currency pair remains near the pivot of 1.12.
The line of 1.12 seems to be shaping up into an important region. The observation of the EUR/USD suggests that movement is still rather sentiment based.
We need to continue monitoring the shorter time frames for possible momentum. Our Bollinger bands remain as support and resistance regions.
From a fundamental point of view, we note that the various markets such as equities are facing a general dip in value. This suggests a risk averse situation and hence a buy in to safe havens such as the US dollar may be happening.
BBC informs of a weak performance over in the US and I qoute” US retail sales were weaker than expected last month, weakening prospects that the Federal Reserve will raise interest rates next week.
The 0.3% fall in retail sales follows four consecutive months of gains.
US factory production also fell in August after expanding for the two previous months, the Federal Reserve said.”
While we may remember that any diminished prospect of an interest rate hike may dampen the US dollar, in this scenario the market impact is probably too overwhelming and hence the risk aversion. In times of perceived trouble in the markets, traders usually resort to the purchase of safe haven instruments like the US dollar.
In the upcoming week, we are expecting numerous important economic events such as the Federal Funds Rate announcement and a speech by the ECB president. Data on new residential building permits and unemployment claims in the US are expected too.
Do trade safely and have your proper money management.