Good day to you.
Hope you are enjoying your weekend so far. I always feel that weekends are great for one to calm his trading mind down and to take an unbiased approach at the chart.
In the previous week, i mentioned that we may range around 1.34 – 1.38. Let us take a look now at the EUR/USD chart.
Indeed the week did range between 1.34 – 1.38.
The last 3 days brought about a great bullish trend and it ended after testing the 1.38 line, closing around 1.3760+/-.
The main highlights of the week were the Greek deficit issue and the apparent performance of the US economy. On Friday, the US Core Retail Sales came in better than expected. Investors were generally positive in the US economy and it was evident in the US equities. This helped to keep risk aversion at bay and the currency pair went up probably due to increased risk taking.
As we look towards the new week, i will like to start by reiterating on a few points.
Firstly, even if there was apparently not much new negative developments in the Greek deficit crisis, this was probably due to a lack of media coverage. It is not a sign of the problem having mysteriously disappearing over night. It was reported that next week, EU finance ministers will discuss on the possibility of a Greece bailout using EU Bonds should the situation calls for it. It is my opinion that the Greek deficit crisis goes beyond a simple fix and hence be on a lookout for risk aversion should developments stall. Furthermore Greece still faced the potential problem of having it’s rating cut by rating agency, complicating access to the ECB loans.
China made news again recently as it was reported that the Assistant Commerce Minister of China said that the Chinese inflation is “mild and controllable.” Reports stated that the China Consumer Price growth reached a 16-month high in February. This may prompt the leadership to take further measures against the speculative bubbles. Be on the look out for risk aversion as investors may be worried that a premature removal of stimulus measures may stall the fragile recovery.
Next week brings us a number of important economic releases. Starting from Monday, we have the US TIC Long-Term Purchases. This data shows the difference between local and foreign purchase of US equities and may be an indication of currency demand since the purchases were made in US dollars. The German ZEW Economic Sentiment in the early week may also shed light on the Euro Zone sentiment. Mid week brings us the US Federal Funds Rate and do be prepared for any unexpected developments. Late week brings us the US Unemployment Claims and the Philly Fed Manufacturing Index, which is a measure of manufacturing sentiment in Philadelphia.
You can find the list of the various economic releases in the Economic Calender below.
From a technical point of view, we are slowly ascending. The bearish momentum seems to have stalled for now and this is indicated in the 200EMA that i have drawn too. See the circle on the 200EMA in the chart above. It is turning flat, instead of the current bearish indication. Nonetheless, bullish fans should not assume that the train will definitely shoot up north as 1.38 can be rather strong.
If nothing adverse happens, we may be ranging between 1.35 -1.4.
Trade safely and do plan your trades well.
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Forex Crunch writes a weekly EUR/USD outlook. It is a very popular write up and he is one of the best.
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