After the long weekend we expect Greenback Bulls to push the pair lower
Trade Balance, Current Account and the G7 meeting might point south EUR/USD
We begin the week with a long weekend on both US and Asian markets. However wee already see 100 pip movements to the south of our graphs. We believe this is a sign of anticipation by market players. They are anticipating releases that could point a significant problem for eurozone; the euro being too high is beginning to show some negative effects on trade balance and current account. This problem is so important the G7 meeting is expected to talk profoundly on this subject to prevent global scale problems.
We have a long weekend on US and Asian markets on Monday so lets jump out directly to Tuesday; we will have trade balance, current account and GDP numbers for Eurozone members as well as the minutes for the last FOMC meeting. The most relevant release will be the minutes because we will see how the Fed is planning to act in future rate decisions. Wednesday will show current account and trade balance for the US, remember these releases are from the past month so don’t expect to see the full effect of the rate cut and the expensive euro already in the numbers. However we can already see anticipation by the market that these releases will hit the euro and take the pair lower. This is about it for the week and we expect the end of the week to depend on how the market reacts to movements on Tuesday and Wednesday, we could either see dip buying by euro bulls or a continuation of the move to the south side of our graphs by greenback bulls, keep an eye on the technical side of trading to get in and out at smart points.
The technical side is beginning to look bearish on EUR/USD. The channel is beginning to turn and will point to the south by the end of this week. We expect EUR/USD to test levels around 1.4000 where it could encounter psychological support. However if fundamentals are behind the Dollar we could see the pair head even lower and test the 1.3900 support.
Have a nice week and please remember to focus and be patient.