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Good day forex trading koalas.

In the previous EUR/USD weekly review, we noted that the bullish momentum had come a long way and technically a bearish correction is probably due. The little resistance the lower trendline provided was an indication of a strong bearish sell off. If 1.42 is breached, we can expected lower regions to be hit for the EUR/USD.

Looking at the EUR/USD chart above, we can see a continuation of the bearish correction. Technically this is a strong momentum as the currency pair slices past historically strong support regions such as 1.44 and 1.42. If the 1.4 line is broken, we are probably entering into a new bearish phrase.

This week gave us a slight hesitation in the early week. As investors and traders pause to make sense of the sharp dip in the EUR/USD, the currency pair resulted in a ranging pattern. However speculations of more problems regarding Greece took it’s toil in midweek and the support broke. There were also concerns regarding the slowing down of Asian’s economies and sentiments took a big hit. The reason is because many investors and economists believe that the current global economic rebound is largely due to Asia’s spectacular growth and hence any slowdown may derail the current developments.


Taking clues from the technical indications, the current strong bearish correction suggests a strong sentiment break down. Many investors, traders and speculators are probably exiting their bullish position on the EUR/USD currency pair.

Sentiment is a strong market mover. As the balance tips over, many on the sidelines will take notice and contribute to the momentum. The main market worries now are probably

  • The Euro Zone deficit crisis. In particular latest speculations regarding the Greece break away from the Euro Monetary Union and the risk of a default. Furthermore Portugal was reported to have slipped into a recession.
  • The apparent slow down of the Asian economies. Recently China raised it’s bank reserve requirements again. This is the fifth time in the year.
  • Next week is an important week with more crucial economic data due. We have the likes of the US TIC Long-Term Purchases which provides insights to the confidence towards the American economic and the German ZEW Economic Sentiment. Germany is the largest economy of the Euro Zone.

    Trade Safely.

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