This weekend is a busy one for me. Not that i can read my favorite forex charts to the wee hours of the morning but rather, MY CRAZY WORK HAS CONSUMED MY WEEKEND. Sigh. When is my million dollar forex take profit arriving? :P
In the previous EUR/USD Weekly Review, we noted that the SMA 20 was pointing up. Having said so, there was still the SMA 50 to be monitored before we could see a possibility of a sustained upwards push beyond the current range. 1.45 / 1.46 were turning out to be tough resistances. Fundamentally speculations were wild regarding the possibility of a third round of quantitative easing by the US Federal Reserve as Mr Bernanke announced the extension of the upcoming policy meeting to two days instead of the usual one.
Technical Analysis
Looking at the EUR/USD chart above, we note a bearish week for the currency pair. As mentioned last week, the current range is a strong range to break and without the indication from the SMAs of the possibility of a strong trend, the medium term outlook is uncertain.
SMA 20 = flat
SMA 50 = flat
Observation of the SMAs give us the uncertainty possibility again. With both SMAs flat, there is no clear indication of the possibility of a sustained trend. However it is important to note that the SMA 200, which usually suggests the long term momentum, lies right below the price action and it may serve as a support against any further bearish advances.
Fundamental Analysis
The important US Non-Farm Payroll report was released on Friday and it was much worst than expected. This will have far extending implications as it is already a concern for many investors and economists that the US economy is stalling. With a depressed employment market, the drag on the economy will be greater. This probably added to the bearish momentum of the EUR/USD.
The depressed employment market will add more pressure to the US government. While it is good to note that the US dollar still gained in this instance of risk aversion, we must be far sighted and understand that the appeal is slowly losing due to the various factor such as a low interest rate, a downgraded credit rating and a chronically sick economy / debt situation.
Over in the Euro Zone, the discussions and disagreements over a Joint Euro Bond continued with Germany objecting it due to the fear that it will increase it's refinancing costs due to the association with financially weaker countries. A S&P official also mentioned that the Joint Euro Bond in discussion will be rated according to the weakest country in the combination and this further complicates the matter.
We may see weak trading volume on Monday due to a US holiday. Important upcoming economic events include the Euro Zone minimum bid rate announcement.
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