Sunday, August 21, 2011

EUR/USD weekly outlook: August 22 - 26

EUR/USD weekly outlook: August 22 - 26
The euro ended higher against the U.S. dollar last week, as the European Central Bank continued buying government bonds but the single currency pared gains on Friday amid concerns that the sovereign debt crisis was spreading to the region’s banking system.

EUR/USD hit 1.4516 on Wednesday, the pair’s highest since July 27; the pair subsequently consolidated at 1.4394 by close of trade on Friday, gaining 0.88% over the week.

The pair is likely to find support at 1.4258, Friday’s low and resistance at 1.4516, Wednesday’s high.

The euro remained supported against the dollar as the ECB continued buying government bonds to keep the region’s sovereign debt crisis from spreading, while European Union officials stepped up efforts to deal with the debt crisis.

On Tuesday, German Chancellor Angela Merkel and French President Nicolas Sarkozy proposed tighter policy coordination between euro zone member states, in an attempt to reassure markets about the cohesion and survival of the single currency bloc.

But the shared currency trimmed gains on Friday, as global equities markets declined amid concerns over funding issues faced by some large European banks.

Sentiment was further hit by worries that Europe's latest bailout for Greece was in danger of collapsing over whether countries that have pledged to provide aid should receive cash collateral.

The European Commission on Friday urged euro zone members to resolve the issue quickly or risk disrupting the bloc's bailout efforts.

In the week ahead, investors will be focusing on whether Federal Reserve Chairman Ben Bernanke will drop any hints about such further monetary easing measures when he speaks at an economic symposium in Jackson Hole, Wyoming, on Friday.

Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets. Copyright @ 2011 - Theme by NanLimo - Thanks to Google