time for the weekend and the opportunity to reflect on our performance.
In the last review, the EUR/USD enjoyed a week of relative bullish momentum. Data from the Europe Zone were generally good while the economic releases from the US were usually worst than expected. We noted that the EUR/USD was approaching the 200 EMA line and historically, the line usually gave problems to the currency pair. We were also reminded that both zones were not doing well too and the weaker economy would probably bear the majority of bashing by the market.
Looking at the EUR/USD daily chart above, we saw the currency pair hesitated majority of the week before finishing the week with a bullish jump.
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Early week started bullish and saw the currency pair testing the 1.32 line. It was breached but the poor US pending home sales caused a drop towards 1.32 again. Besides this, we know that technically, the line would probably have a "magnetic" effect on the price action too.
Midweek saw the currency pair breaking down due a report of China's conducting of stress test for her banks. Rumors and speculations were flying as investors fear that a slowing of the economy giant may derail the global recovery.
When the end of the week approached, continued positive data urged the EUR/USD along. The US unemployment claims came out higher than expected, causing investors to worry that the US job market may be worst than imagined.
The final blow came as the US Non Farm Payroll came out twice as worst as expected. This caused a spike towards the upside. Trading during the NFP is extremely dangerous as anyone speculating on the downside with excessive trade sizes would have had their margin accounts wiped clean ! The price finally settled down near one of the koala's signature "I LOVE IT WHEN MY CHART WORKS" line of 1.3285.
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I was reading a report speculating on the Fed's decision of whether to continue emergency stimulus actions or not. While the recent poor data and situation of the US economy provides a basis to argue for continued stimulus, many also debate that continued stimulus may hurt future growth. Regardless, one thing that caught my attention is the recent number of US "bashing" reports that are surfacing in the media.
I always warn that the US economy is probably not as robust as we hope to be. With a massive deficit to her name, one need not dig deep to find the problems. The scrutiny relief was probably courtesy of the Euro Zone crisis. Apparently with the worst over, the media and investors needs to move on to find the rotten apple. I fear the US will be next soon.
From a technical point of view, with the 200 EMA close by, i remain apprehensive towards a clean momentum. Not saying it is impossible, just apprehensive.
Next week brings many important data including the Federal Fund Rate and US retail sales. You can find the list of the various economic releases in the Economic Calender below.
Caution is advised. Trade safely.
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Related Forex Articles from the Koala Forex Training College.
- What is risk aversion in forex?
- Unemployment crisis in the US
- How to identify support and resistance lines
- Proper planning of trades is important
- The story of a margin call. Tom
Forex Crunch writes a weekly EUR/USD outlook. It is a very popular write up and he is one of the best.
Winners Edge Trading with his great technical analysis brings about much knowledge to learn.
