Good day forex traders.
How was your trading week? Hope you ended it green with pips! Remember forex is a slow and steady journey and one should not expect to be rich overnight!
In the previous EUR/USD weekly forex forecast review we noted that the technical indicators were suggesting continued bearish momentum. The close of the currency pair below 1.28 gave rise to the possibility of seeing 1.26 as an extended target of a bearish dip. Fundamentally the outlook for the Euro Zone remains poor. German factory orders fell the most in almost three years for November. Furthermore the many upcoming debt redemption due in 2012 continues to put a strain on the region.
Looking at the EUR/USD Daily chart above, we can see a bearish channel beginning right at the 1.38 region. The SMA 20 had functioned as an immediate resistance capping any bullish correction.
SMA 20 = Bearish
SMA 50 = Bearish
I mentioned in the previous weekly EUR/USD forex forecast that after 1.28 we might see the extended target of 1.26. It almost hit that region in view of the US Dollar strength this week. I LOVE IT WHEN MY CHART WORKS ! 🙂 I believe that this may be a probability this week should the SMA 20 continue to function as a resistance.
The Euro Zone and it’s currency were plagued throughout the week by the speculations of rating cuts by S&P. Despite the decision by the European Central Bank ECB to leave interest rates unchanged, demand for the Euro currency remained muted. The ratings cut did arrive eventually, resulting in France and Austria losing their top credit grades among other cuts. Germany is the only country in the Euro Zone left with the top AAA rating. S&P believes that the actions of the European leaders were not quick enough to quell the crisis and more must be done faster.
In view of the cuts, German Chancellor Angela Merkel mentioned that this strengthens Germany’s view that the Euro Zone must increase their efforts to resolve this budget deficit crisis. It was reported that Greece is in a crucial situation as talks regarding the cut of the face value of Greek debt stalled due to the failure to agree on the new coupon and maturity of the bonds.
Among the economic data due next week, France is scheduled to hold a bond sales and it is important to monitor the outcome as an indication of the views of the market towards France’s rating cut.
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