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Good day forex trading koalas.
In the previous EURUSD weekly review, we noted that the US Non-Farm Payroll while positive, was less than expected. Having said so, the unemployment rate has dropped. The Euro Zone continues to face uncertainty and from a technical point of view, the EUR/USD is stuck in the 1.36-1.38 range for more than 10 days now.
Looking at the EUR/USD chart above, we see a potential head and shoulders formation. If indeed so, we may see a drop to 1.34 and below. Having said so, recent years have us facing a sentimentally focused trading environment and hence unpredictability is high.
The week started with a small forex gap to the downside and the currency pair fought hard to regain the 1.36 line. When the EUR/USD succeeded in regaining the 1.36 line, it settled into a tight range of 1.36-1.3680 until midweek. This was probably due to the mixed economic data being released. Of interesting fact was the interest rate hike by China which apparently caused little commotion in the markets. This suggests that the markets are probably indifferent by now towards China’s frequent moves to curb market speculative growth.
A bullish momentum developed around mid week and it went on to hit the 1.3715 region. Having said so, the momentum soon weakened and the EUR/USD came crashing down back to the 1.36 region for a close of the trading week.
With the resignation of Egypt’s President, risk averse investors with regards to the economic and oil disruption problems are probably relieved. Risk seeking activities will probably increase as positivity returns. This is reflected in the equities markets, specially in the US where merger & acquisitions and retail activities add on to the positive sentiments.
Mr Bernanke of the US Federal Reserve mentioned earlier this week that the economic recovery has strengthened. Having said so, he believes that unemployment will remain high for some time. Many investors speculate that this may be an indication that the Federal Reserve will continue to support the economy through measures such as quantitative easing.
Over in the Euro Zone, concerns regarding a successor for Mr Trichet as the president of the European Central Bank and speculations regarding Portugal’s high 10 years bond yields are plaguing the single currency’s outlook. An union of countries with different cultures and economic characteristics will definitely be a challenge.
Next week is an important week as many important economic data is due. For example, early week brings us the likes of the German ZEW Economic Sentiment and US Retail Sales. You can find the list of the various economic releases in the Economic Calender below.
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