The EUR/USD will start the week near the 1.06390 level, which may be a good result for bullish traders considering the fact the currency pair was challenging a low of nearly 1.04800 only a handful of hours before the surge upwards. The EUR/USD mirrored trading results seen across the Forex market last week. The stronger USD suddenly had its momentum halted on Friday and EUR/USD buying erupted.
U.S. economic data showing a lower expected Hourly Earnings report was the chief instigator of the buying trend and the weakness in the USD. Financial houses which have been slowly crawling back into action and were quite cautious regarding their outlooks regarding the U.S Federal Reserve last week suddenly had more evidence that U.S inflationary pressures may be lessening. The buying momentum of the EUR/USD took the currency pair from a value it had last seen on the 8th of December, and back into a higher range.
The EUR/USD Toppling of 1.06000 could prove important for Behavioral Sentiment
The ability of the EUR/USD to climb back above the 1.06000 ratio could factor heavily into trading early this week. This ratio may be viewed as an important level psychologically by traders who are trying to gauge perspective. Short-term traders however need to be aware that on Thursday of this coming week, critical inflation data will come from the U.S. again via the Consumer Price Index statistics.
On the 30th of December, the EUR/USD traded above the 1.07125 mark and bullish traders perhaps dreamed about apex marks seen in the middle of December when the currency pair touched 1.07375 briefly. However, the fact that holiday trading had been in effect and volumes were much less than normal certainly helped the EUR/USD touch the 1.07125 level before the New Year. Now that the full volume will be delivered this coming week and important U.S. data will be published, speculators should expect volatile conditions as equilibrium is fought over.
- If the 1.06000 level can be sustained early this week it could signal additional bullish momentum is being anticipated by financial houses who may be expecting U.S CPI numbers to come in below their estimates.
- If the 1.06000 ratios is broken lower early this week it could simply be a sign that EUR/USD trading remains cautious and additional ‘facts’ need to be seen later this week. The results of the Consumer Price Index numbers this coming Thursday will impact Forex.
EUR/USD Weekly Outlook:
The speculative price range for EUR/USD is 1.05150 to 1.07450
Having traded below the 1.05000 ratio this past Friday, traders should acknowledge the EUR/USD can trade lower. This depth may have been accomplished with a speculatively selling frenzy, as financial houses wagered on a higher Hourly Earnings result via U.S data. When the inflation statistic came in weaker than expected and proved some financial houses wrong, the reversal higher was very strong. However, the upward climb of the EUR/USD did not break above the values seen on Tuesday of last week when the EUR/USD traded near the 1.06800 level.
Trading in the EUR/USD should be expected to be rather dynamic this week. Support levels near the 1.05900 to 1.05700 levels need to be monitored. If these ratios prove durable it may be a good bullish sign for the EUR/USD. If the EUR/USD were to break below the 1.05700 mark it could signal additional nervousness is building within the currency pair ahead of Thursday’s key U.S inflation data to come.
If the EUR/USD remains within sight of its current price ratios and the 1.06500 level is penetrated higher and sustained, more buying could be delivered. Traders may be targeting the 1.07000 level, but they are cautioned not to be overly ambitious, particularly not before the U.S CPI statistics are published.
