Central Banks are over, at least for the month, and have left a sour taste in everyone's mouth. The futures is dark and negative outlooks are the new normal. The Federal Reserve of course, did not eased, as such move will literally destroy confidence in the Central Bank. Instead, Janet Yellen came in with an extreme cautious stance, blaming the ongoing market conditions of their decision to downgrade the economic growth outlook. Hopes of a rate hike for this 2016 faded after the dot plot showed that policy makers now estimate two rate hikes for this year, instead of the previously expected four.
And the dollar suffered. A sharp recovery in commodities also played against the American currency, whilst BOJ inaction added to the picture, with the JPY surging to fresh over a year and a half high of 110.66.
View the Live chart of the EUR/USD
As for the EUR/USD pair, is up for a third week in-a-row, but with no clear long term definitions, still range bound. The pair reached 1.1341, a few pips below 1.1375, February 11th high, before retreating slightly below the 1.1300 level. This Friday's decline is mostly due to some profit taking ahead of the weekend, particularly considering than the pair added around 500 pips in a bit more than a week.
In the daily chart, the bias is higher, as the price has advanced and remains well above its moving averages, whilst the technical indicators have barely retreated from overbought levels, rather tracking the daily decline than suggesting the pair may extend its decline. In the weekly chart, however, technical readings lack upward momentum, with the price above a flat 20 SMA.
For the upcoming week, the pair is poised to extend its advance, with a break above 1.1375, opening doors for a test of 1.1460 a major static resistance level. Given that the level has contained rallies since early 2015, further gains beyond it should trigger big stops, and result in a continued advance up to the 1.1550/1.1600 region.
The pair has an immediate support at 1.1245, but it will take a steady decline below 1.1120 to deny a bullish continuation, with the market then pointing to retest the 1.1000 psychological support.
Latest updates on the EUR/USD Forecast
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