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In the previous EUR/USD Weekly Review, we noted that the US NFP was worst then expected and that the American economy is really not out of the danger zone yet. Mounting debts are a threat and the low interest rate threatens to erode the value of the US Dollar. On the other hand, while the Euro Zone’s diversity complicates efforts to cooperate, it also shields the entire Euro Zone from a immediate complete melt down when financial crisis strikes.

Looking at the EUR/USD chart above, the currency pair is currently in a steep drop. Slicing through the 1.44 line like butter, if the bearish pressure persist, we may be looking at 1.42 next. It seems that the market is not ready for a higher Euro currency for now as the EUR/USD tried unsuccessfully to break beyond 1.46+. From a technical point of view, the currency pair will be bearish unless it consolidates and holds above 1.44.

The main highlight of the week was probably the Euro Zone minimum bid rate which remained unchanged at 1.25%. While a number of investors hoped that an interest rate hike was done, the market was relatively unsurprised with the move. Having said so, comments from the European Central Bank ECB indicated that there might be differences regarding the solution to the Greek deficit crisis and the market took that badly. Despite previous developments regarding the continuum of a Greek solution, possibly involving a further bailout and even private involvement, individual ECB officials deferred in their take on the situation. It may be possible that Greek developments may continue to steer the Euro currency next week.

Across the Atlantic, the American economy continues to show signs of weakening growth.

Source: Bloomberg

A look at the S&P 500 graph above indicates a declining equities market since May 11. The index has fallen below 1300, indicating that sentiments are dropping. With the poor recent US Non-Farm Payroll, the lagging employment market is apparent. As we approach the end of the second round of quantitative easing exercise, we may expect rocky market conditions as it is widely believed that the strong equities rebound was probably aided greatly by the extra liquidity.

Monday may bring us less volume as a number of huge European economies will be on a holiday. Next week will bring us a number of important economic data such as the US Retail Sales and US Consumer Price Index.

Trade Safely.

Related Forex Articles from the Koala Forex Training College.

  • How a low interest rate affects a currency
  • Risk aversion in the forex market
  • The US Non-Farm Payroll 3 June 11 Review
  • Trying to catch tops and bottoms excessively is a forex mistake
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