EUR/USD Enters Consolidation Phase
ForexTime | Sep 15, 2014 04:23AM ET
In line with forecast, the EUR/USD entered a consolidation phase last week after experiencing heavy selling following the ECB’s surprising interest rate decision the week prior.
In general, economic news from the EU was quiet, while ECB President Mario Draghi’s speech in Milan on Thursday failed to provide any unexpected volatility. US economic data was also low in quantity, however Friday’s news that Advance Retail Sales increased by 0.6% last month will be seen as encouraging for Q3 GDP.
The coming week should be busier for the pair, with the latest German ZEW Survey on Tuesday being followed by EU Inflation data on Wednesday. Also, on Wednesday evening, the Federal Reserve are expected to taper quantitative easing (QE) by a further $10bn, while also announcing a conclusion to QE in October which should reaffirm to investors that the Fed is one step closer to normalizing monetary policy and subsequently, increase confidence in the Greenback.
Looking at the technicals on the Daily timeframe, the EUR/USD continues to be traded in a bearish channel. We can also see that the pair has entered a consolidation period, with resistance around 1.2960 currently preventing this pair from entering 1.30. For the pair to reach 1.30 once again, it is possible that we will either require the German ZEW Survey to show that German data is returning to some sort of consistency, or a surprisingly dovish FOMC statement on Wednesday evening.
Support can presently be found at 1.2891, alongside the current yearly low, 1.2858.
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