The EUR/USD will begin trading near the 1.05325 price range when the markets open on Monday. The EUR/USD traded near a high of almost 1.05880 on Friday, which came within sight of highs on the 5th of December near the 1.05930 mark. A low of about 1.04430 was seen on Wednesday.
While speculators who have been pursuing the upside momentum of the EUR/USD may have been disappointed with the sudden consolidation the currency pair produced, it remains evident the EUR/USD is still within its higher ground via three-month chart perspectives. Experienced traders understand that reversals are a part of normal market action. What may prove attractive to speculators is the knowledge support levels have incrementally climbed over the past two and a half months.
The EUR/USD is trading in Step with other Major Currency Pairs
The EUR/USD may not have been able to topple the 1.06000 level last week, but its ability to sustain prices above the 1.05000 ratio is important. This coming Thursday the ECB will release its interest policy outlook and likely raise its key borrowing rate by another 0.50%. If the European Central Bank manages to issue no major difference of opinion compared to other global central banks, financial houses will likely react in a positive manner.
Having achieved a solid bullish climb upwards since trading below parity in the fall of this year, the EUR/USD is showing signs of a recovery and its sustained price last week is a good result. The Forex market is likely to be rather choppy in the coming days as financial houses brace for the potential of sudden surprises, but if economic data remains relatively near expectations, behavioral sentiment may continue to foster an incrementally stronger EUR/USD mid-term.
- Day traders should be ready for the potential volatility early this coming week and certainly on Wednesday and Thursday.
- The U.S Fed releases its interest rate policy on Wednesday and the ECB publishes its Main Refinancing Rate on Thursday. The European Central Bank is expected to raise its key borrowing rate by 0.50% to 2.50%.
- This coming Friday the French and German Purchasing Manager statistics will be published.
EUR/USD Weekly Outlook:
The speculative price range for EUR/USD is 1.04310 to 1.07350
The ability of the EUR/USD to provide traders with a relatively strong level of support in the middle of the past week should be considered. Certainly, the value of 1.04430 could be penetrated lower, but the reversal upwards when it was challenged this past Wednesday is noteworthy
If the 1.0500 level remains durable early this week that could be a good indicator that financial houses believe the EUR/USD is within an accepted equilibrium which can be tested with polite trading ratios. If the 1.05000 were to be weakened and the 1.04800 mark were challenged, this would still be within the known range of the EUR/USD. A move below the 1.04400 could be cause for alarm, but this level may prove to be resilient and be a lower depth that holds.
The solid buying produced in the EUR/USD slowed this past week, but the test of upwards momentum on Friday before being slightly pushed back might be encouraging for bullish speculators. If U.S inflation data continues to meet expectations without crushing estimates wildly, the EUR/USD may continue to find enough support to find room to flourish a bit more to the upside.
The trend upwards the past two and a half months has been solid, so traders should keep their targets realistic and not expect another superior advance for a while. The EUR/USD may need time to consolidate and some slight choppiness would not be a surprise. However, buyers of the EUR/USD looking for the 1.05700 to 1.05900 range may be proven correct at some point this week. If the EUR/USD breaks above the 1.06000 level and sustains this ratio, this would be a good bullish indicator.
