The EUR/USD pair bounced very sharply from the 1.3640/20 support level during the last week. The pair also traded above the critical 1.3770 resistance level after the bounce. The pair is currently testing the intermediate resistance level at around the 1.3810 level. I think the pair can make a new highs from the current levels, and test the trend line, as plotted on the weekly chart shown below.
EUR/USD 1" title="EUR/USD 1" name="image00.jpg" height="197" align="bottom" border="0" width="400">
There is an up-move trend line, as can be seen in the 4 hour chart shown below. There are supports at around the 1.3770/40 levels. If the pair pushes a bit lower from the current levels, stops around the mentioned levels and forms a bullish divergence on the lower timeframe, then we can jump into a buy trade.
EUR/USD 2" title="EUR/USD 2" name="image01.jpg" height="196" align="bottom" border="0" width="400">
Initial target should be around the 1.3880 level, and final target could be around the 1.3980 level. Stop should be placed below the trend line and support level.
Major events scheduled in the upcoming week
The US dollar buyers were seen nervous during the last week, as the pairs like the EURUSD and GBPUSD jumped higher from the lower levels, and managed to trade above key levels. The EURUSD pair breached an important swing area at around the 1.3750 level, and challenged the 1.3810 resistance level. The aggressive buying in the Euro was the result of better than expected inflation data. The buyers tool control, and pushed the EURUSD pair higher. The GBPUSD also traded above the 1.6720 level, and looks set for a test of the 1.6800 level. Another pair which traded higher was the NZDUSD. The NZDUSD pair traded above the 0.8400 level. We need to see how the market reacts to all major economic releases scheduled during the next week.
Let us look at all major events lined up in the upcoming week.
Sunday – China HSBC manufacturing PMI.
Monday – Spanish manufacturing PMI, Italian manufacturing PMI, French manufacturing PMI, Euro zone manufacturing PMI, German manufacturing PMI, UK manufacturing PMI, US personal spending data, ISM manufacturing PMI and RBA interest rate decision.
Tuesday – UK construction PMI and Australia’s GDP data.
Wednesday – Spanish services PMI, Italian services PMI, German services PMI, Euro zone services PMI, UK services PMI, Euro zone GDP data, Australia’s retail sales data and US ADP nonfarm payroll employment change data.
Thursday – German factory orders, BOE interest rate decision, ECB interest rate decision, US initial jobless claims and Canadian Ivey PMI.
Friday – Swiss unemployment data, Swiss inflation data, German industrial production data, Canadian employment report, US nonfarm payrolls and the US unemployment rate.
This analysis is taken from Weekly Market Forecast, which also includes trade opportunities on: GBPUSD, EURCHF, EURAUD, AUDUSD, AUDNZD, GBPCAD, EURCAD, EURRUB, OIL, GOLD and INDICES.