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In the previous EUR/USD weekly review, we noted that the US stocks were falling due to concerns towards the European deficit crisis and the weaker economic data streaming out of the US. With the approval by the International Monetary Fund for a joint IMF and EU $36.8 billion loan to Portugal, it would probably help boost sentiments for sometime.

Looking at the EUR/USD chart above, the currency pair fell short of overcoming 1.4 and experienced a sharp bounce towards the previous support and resistance level of 1.43.

The week began with a bearish note due to the continued concern and aversion towards the situation in the Euro Zone. While the Portugal development was encouraging, Greece remained a target of speculation with regards to a possible default. Many investors were worried of the potential fallout should Greece default.

While the EUR/USD went as low as below 1.4, technically it is a strong support and true to say, the currency pair reacted strongly at this region. Furthermore the economic data from the US is increasingly weak including a less than expected GDP figure. Coupled with hawkish tones from the Euro Zone regarding Greece, the currency pair further went north.

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As the date draws near for the Greek accession by the IMF with regards to the $4.7 billion aid payment, investors will probably get more apprehensive. Initially the bailout plans factored a return to market sourcing for further financing. However the slide of the bonds make it an extremely challenging solution for the country. Adding in to the complexity, the Greek political front continues to be a challenge too as the Greek Prime Minister faces opposition regarding austerity measures.

Over in the US, the theme of a weakening growth of the economy continues and the statistics seems to suggest that. A number of economists expressed concern that the raising fuel costs is affecting growth. With the quantitative easing policy due to end soon, it is also speculated that the market may face a sentiment hit as it is widely believed that the good recovery of the US equities is fueled by such monetary measures. The important US Non-Farm Payroll due this coming Friday will be a figure to watch for. Any negative developments will probably trigger a sentiment fallout as the previous months were good.

From a technical point of view, watch out for the 1.43 region. A bounce off the resistance will see 1.4 again while a breech of it brings 1.46 to aim.

Trade Safely.

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