Forex Guides

EUR/USD Weekly Review 4 Dec 11

Good day forex traders.
Now that the last month of the year is here, what thoughts are running through your mind? Are you glad that the year is coming to an end?
In the previous EUR/USD weekly review, we noted that the 1.34 region did not hold. With the SMA 20 over the SMA 50, all that remains is for the SMA 50 to turn fully bearish and the possibility of a sustained bearish momentum will be high. The SMA 200 which is an indicator of possible long term trend is now slightly bearish. From a fundamental point of view, the European budget deficit crisis is still in a complicated situation and with the recent credit rating cut of Belgium, sentiments remains depressed. In fact it was reported that Germany is apparently struggling with it’s own bond auction. This suggests that events the Euro Zone’s fiscally sound countries are starting to be implicated.
Technical Analysis
Looking at the EUR/USD chart above, the week was a bullish week. Closing around the 1.34 region, this historically important region of support and resistance is an area to be closely monitored.
SMA 20 = bearish
SMA 50 = flat
The SMA 50 did not turn bearish and the currency pair did not dip further too. With the SMAs not aligned in a direction, the possibility of a sustained momentum remains uncertain.
Fundamental Analysis
The market sentiments are warmer due to developments of the Euro Zone budget deficit crisis. It was reported that there is a proposal to channel funds from the central banks of Europe via the International Monetary Fund IMF to aid struggling Euro Zone countries. The loans can be as much as 200 billion euros. This proposal may facilitate funds without violating European rules that prevent the European Central Bank ECB from providing direct financial assistance. This is a a much welcomed change in development from the usual differences emerging from the 17 nations European Union.
Over in the US, falling treasuries resulted in higher yields as it was reported that the action by the Federal Reserve to provide emergency dollar funding for European Banks might had eased concerns in the market regarding a worsening Euro Zone budget deficit crisis. The drop in the latest US unemployment rate to 8.6% may increase positivity but one must take note that much of the jobs created are related to temporary assignments due to the festive season.
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