Forex Guides

EUR/USD Weekly Forecast 21 Dec 15

Good day readers.

It is always great to be penning down my thoughts on the EUR/USD. It will be the 9th year soon and time flies indeed!

In the previous EUR/USD forecast we noted that the currency pair was again bullish for the week. It hit our bullish target of 1.1 as expected.

The middle bollinger band had served as a resistance and this was expected. Any bullish momentum would need to breach the 1.1 region first. A correction would likely have the EUR/USD heading towards 1.08.


Technical Analysis

Looking at the EUR/USD weekly chart above we note that the currency pair tested the middle bollinger again and failed. It is an excellent situation when our technical analysis works like clockwork. 🙂

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After failing to breach the middle bollinger band, bearish momentum took over and sent the EUR/USD towards 1.08 as forecasted. The support region held and the currency pair had since eased back to 1.086.

Should the bearish correction manage to push beyond 1.08, we may expect extended bearish targets at 1.06 and 1.05. Bullish return will see the EUR/USD head towards 1.1 again for a retest of the resistance region.

Fundamental Analysis

With the US Federal Reserve interest rate hike behind us now, the markets may start to exert influence on a new momentum. It is important to note that with any interest rate increase, immediate sentiments are likely to favor the US dollar for now. The interest rate hike puts the US monetary policy in a tightening mode whereas central banks in Europe and Asia Pacific are mostly still easing.

The S&P 500 has fallen and is now close to the 2000 points support. An increase in interest rate translates into higher costs of funds. This likely dampened the equities market. It is also crucial to be aware that the strong US dollar is likely to reduce the competitiveness of US companies doing export. This may have a negative impact on the US economy.

With the low volume market condition persisting, do be very careful with your trading. Always practice proper money management.

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