This ending week was all about fear, with crude oil prices reaching over 12-year lows, and worldwide major indexes plummeting to levels not seen in over a year. And all of this happened in a week where China was down on holidays, and refrained from publishing macro data!
Investors concern these days is growth, particularly after Janet Yellen expressed its concerns on how things are going on in the world's largest economy. Also, fueling risk sentiment was the Sweden Riskbank, cutting rates further into negative territory by surprise, from the previous -0.35% to -0.50%. The move fueled fear over the profitability of the European banking sector, sending shares plummeting. Yields fell, with UK ones at record lows and the 10y US note down to 1.53%, its lowest level in two and a half years.
Surprisingly, risk sentiment eased on Friday, mostly because some market talks pointing for an agreement between OPEC and non OPEC producers, to cut oil output, or at least, freeze it at current levels, according to Venezuela proposal. Nevertheless, no official announcement has been made, which means that risk-averse trading can resume sometime next week.
View the Live chart of the EUR/USD
Anyway, the dollar trades generally higher across the board, and the EUR/USD pair eases from a fresh 3-month high of 1.1375 achieved this Thursday, but holds well into gains weekly basis, above the 1.1200 level. Poised to close in the green for a third week in-a-row, the daily char is showing limited signs of upward exhaustion, as the technical indicators turned sharply lower from oversold levels, but the price remains far above its moving averages. Moreover, the 20 SMA heads sharply higher, and is pointing to overcome the 200 SMA, in line with further advances for the next week.
The pair has an immediate resistance around 1.1375, and if it breaks above it, the 1.1460 region seems the next logical target, a line in the sand for bulls, given that the level contained rallies for most of the past 2015. A huge battle between bears and bulls should be expected it the price reaches the level, and if bulls finally win it, the rally could be far more interesting during the rest of the month, with the next bullish target at 1.1620.
The first support to care about it 1.1120, as below it, bears can take over the pair, with 1.1000 and 1.0880 as the next levels to watch and probable bearish targets.
Latest updates on the EUR/USD Forecast
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