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Welcome to the weekly review of the EUR/USD.
This week presented us with a challenge as the EUR/USD was mainly ranging. Ranging conditions are one of the most difficult scenario as traders tend to attempt to pick tops and bottoms.
Nonetheless, we were fortunate enough as the currency pair stayed true to the previous week’s review and was bounded between 1.42 and 1.45.
The week was pretty much full of important economic releases. This ended with the US Non-Farm Payroll as the finale. With that, we discovered that jobs were still being lost and the unemployment rate remains at 10%. We have to consider this from a potential investor’s point of view. An unemployment rate of 10% does not gel well with economic success. Furthermore, with the FEDs commenting often that a high unemployment rate is a reason for a low interest rate, investors may take this into account, especially in carry trades. The US Dollar may hence weaken as a result.
While no one can predict the future, with sufficient homework one may plan their trades for what may possibly happen. Having some idea is definitely better than no idea.
My last check on the usual clues shed some light.
The S&P 500 is still bullish although the momentum has weaken recently. Gold remains undecided but appears to be recovering from the previous drop that pushed it below $1100. Oil benefited from the extreme winter recently and currently remains above $80. I mentioned previously that Oil can be an important indicator for the economy’s health and hence i am observing if it can remain above $80 after the winter.
While the sentiment seems to be rather positive for now, we must always remember that troubles do not fix themselves. For example, Greece was in the limelight again and this caused some movement in the currencies. Another problem, the unemployment rate in the US, wasn’t given much attention until last Friday’s poor Non-Farm Payroll release.
From a technical point of view, we are currently at a region that the EUR/USD previously ranged too.
The price seems to want to test the upper limit @ 1.4480/1.4500. Any decisive break above this may bring further bullish momentum.
Should the test of the resistance fails, we may swing down towards 1.4200.
Next week bring us numerous important releases. These includes EURO’s minimum bid rate and US’s trade balance and retail sales. Refer to the economic calender for more information.
These important releases have the potential to create spikes and even drive the EUR/USD towards and beyond the limits i mentioned earlier. Therefore please trade with proper money management.
As usual, watch the equities and commodities for more clues.
Read more Forex Articles and Views by The Koala at www.thegeekknows.com