- The EUR/USD ended the week of trading near the 1.08360 mark after a rather brisk five days of trading which provided rather hectic results.
- A low of 1.07240 approximately was hit on Tuesday of last week and then the currency pair started to incrementally increase.
- Economic data from the U.S did not make things easy for EUR/USD speculators as statistics provided rather murky results for financial institutions to try and interpret.
The Federal Reserve is now in a position which seems to make it unlikely that an interest rate cut will happen in the U.S at best until June of this year. The European Central Bank will have their monetary policy meetings this week and this coming Thursday is likely to keep the Main Refinancing Rate at 4.50%. The EUR/USD traded in a choppy manner all of last week and although it finished slightly higher than where it started, speculators who are bulls will not be resting easy.
The 1.08000 Ratio Remains a Focus for the EUR/USD
The ability to finish trading on Friday above the 1.08000 ratio is rather intriguing. A low of 1.078900 was challenged on Friday immediately after the Non-Farm Employment Change numbers were published in the U.S as the report came in stronger than anticipated. However, the reversal upwards which soon developed shows financial institutions seem to believe equilibrium rest above the 1.08000 mark as global central banks are confronted with troubling economic data from many corners.
Things are not going to get easier regarding fundamental data this week because the U.S is set to publish a slew of inflation data on Wednesday and Thursday. The EUR/USD is likely to remain choppy and technical traders who do not like to hear too much about fundamentals may actually have solid reasons for simply looking at support and resistance levels in the coming days. The range of 1.07800 to 1.08700 may continue to find plenty of battles in the days ahead. However there are concerns which need to be considered regarding U.S data.
ECB and U.S Inflation Equal Distress for EUR/USD this Coming Week
While the ECB is unlikely to lower its interest rate this week in a proactive move, the notion continues to get stronger that the European Central Bank should cut its interest rate before the Federal Reserve. Yet, this is not likely to happen. But trading results in the EUR/USD may be affected by these considerations in the days ahead and cause turbulence in the currency pair.
- Consumer Price Index data from the U.S this coming Wednesday will create impetus in the EUR/USD and traders should make sure they are using solid risk management before and after the inflation results.
- The ECB is likely to talk about the potential dangers of inflation too this coming Thursday, particularly if Crude Oil prices remain high early this week.
EUR/USD Weekly Outlook:
Speculative price range for EUR/USD is 1.07795 to 1.08855
Technical traders may find that the EUR/USD price range starts to grow more sedate this week, but they should not get comfortable. The lack of clarity from economic data and the notion that the ECB and Fed will both continue to sit on their hands creates the potential for a test of known values as financial institutions try to maintain fair market price. The ability to remain above the 1.08000 level going into this weekend and actually testing the 1.08400 vicinity on Friday before closing slightly lower is intriguing.
Trading early this week should be watched carefully in order to gauge behavioral sentiment which remains fragile, but if the EUR/USD remains stable in the first handful of hours on Monday this could begin to prove Forex now believes the existing price range is balanced. The EUR/USD remains within the lower elements of its three month price range and within a middle ground when a one month chart is considered. These charts seem to verify the fact that current values will persists in the days ahead.
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