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Good day forex traders.

In the previous EUR/USD weekly review, we noted that the 1.34 line held as a support. However there were multiple attempts to break the floor and that was an indication of a strong bearish pressure. Both the SMA 20 and SMA 50 were pointing downwards and hence the possibility of a continued bearish momentum was high. The SMA 200 was rounding the top to become downwards soon. Being an indicator for long term trend, such a development would further add to the possibility of a sustained bearish momentum. From a fundamental analysis point of view, stocks in Europe posted the largest weekly gain in 14 months and it was probably due to better sentiments as a result of the successful German vote for an enhanced euro zone rescue fund. More economists were believing that a cut of the benchmark interest rate would be done soon by the ECB. This might further reduce long term demand for the euro currency. In the US, the Federal Reserve’s Operation Twist got going with the buying and selling of bonds.

Technical Analysis

From a technical point of view, the 1.34 line remained pivotal for the EUR/USD as seen in the chart above. As mentioned previously, the SMA 20 may serve as an immediate resistance and this is seen above too.

SMA 20 = downwards

SMA 50 = downwards

With both SMAs still downwards, the possibility of further bearish moves remains. Having said so, we may expect that the 1.32 and 1.34 to be instrumental as supports. SMA 200 remains flat and close observation should be continued.

Continue on to for the fundamental analysis of the EUR/USD Weekly Review to understand more about the underlying market sentiments.

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