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EUR/USD Weekly Forecast 5 Dec 16

Good day forex traders.

Welcome to another review of the EUR/USD currency pair.

In the previous forecast we noted that the US dollar appeared to have stabilized versus the euro. The  1.06 region is a crucial support and resistance zone. Close monitoring was advised.

Looking at the EUR/USD weekly chart above we note that the currency pair is still within the vicinity of the 1.06 region as expected. It is good that the currency development remains within expectation.

Many readers continue to speculate a return to 1.12 and have committed to big positions. While the EUR/USD may return eventually, there is no way to predict if it will dip further. Therefore we continue to recommend monitoring on the shorter timeframe to observe momentum.

The recent US Non-Farm Payroll was pretty much in line with expectations. Bloomberg reports ”

U.S. hiring picked up in November, while the unemployment rate tumbled to a nine-year low on a drop in the number of people in the workforce and wages unexpectedly declined, providing a mixed picture of the labor market. The 178,000 gain followed a 142,000 rise in October that was less than previously estimated, a Labor Department report showed Friday. The median forecast in a Bloomberg survey called for a 180,000 advance. The jobless rate fell 0.3 percentage point to 4.6 percent as labor participation dropped for a second month. ”

The current situation is along the idea of a moderate pick up. The general consensus is that the US Federal Reserve will hike the interest rate this month.

Over across the Atlantic, the European Union remains on the edge as all eyes are on the Italy referendum. BBC reports ”

The prospect of two Eurosceptic parties gaining ground in the eurozone’s third-biggest economy might well rattle the markets.

Government ministers will tell you that unemployment is inching down, that the deficit is falling and that labour markets have become more flexible. But the economy is 12% smaller than when the financial crisis began in 2008.

Italy’s banks remain weak. The problem of non-performing loans has not been sorted out and the country’s debt-to-GDP ratio, at 133%, is second only to Greece’s. ”

There is apprehension indeed among traders of a rise to power of an Italian government skeptical of the union. Together with the Brexit decision, concerns are of a disintegrating Euro Zone.

Next week brings important events such as the European Central Bank minimum bid rate. Do trade safely.

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