EUR/USD: Weekly Forecast 5th March - 11th March

The EUR/USD produced a rather intriguing range last week as a low of nearly 1.05335 was seen on Monday, and a high near the 1.06920 ratio on Wednesday was demonstrated.  The EUR/USD will begin this week of trading near the 1.06345 level and speculators should brace for the potential of volatility to develop. The U.S. will be in focus on Fed Chairman Jerome Powell’s testimony to the Senate on Tuesday and then Non-Farm Employment numbers will be published on Friday.

Inflation data from Germany last week continued to show the nation and Europe are experiencing stubborn prices.  ECB President Lagarde will speak this coming Wednesday, but she is not likely to give many new insights regarding European Central Bank policy at the event she is attending. The EUR/USD experienced a rather consolidated range last week, but its ability to turn in a strong finish on Friday may trigger some speculative contemplation.

Short-Term Upwards Trajectory Produced a Higher Middle Ground for EUR/USD

Before optimistic bullish traders rush into the EUR/USD, they should consider that Friday’s upwards momentum may have finished the week in a slightly higher middle ground for the currency pair, but may not signal a vast amount of buying to come. Financial houses are likely to remain rather cautious tomorrow and on Tuesday, there will be a reaction to the U.S. Federal Reserve Chairman’s monetary policy comments. Traders should expect volatility, but also understand because of the jobs and wages data coming on Friday choppy conditions may rule Forex, including within the EUR/USD.

A glance at a one-month chart does show the EUR/USD is still within the lower end of its price range.  The EUR/USD did climb above the 1.06920 mark after falling to lows when the week began, but the currency pair is still close enough to its lower values to make technical traders consider the potential for more downside. The U.S. central bank will raise its interest rate on the 22^nd of March, but that has been factored into the EUR/USD already. It is possible the currency pair has already had an additional quarter of a point digested into the value of the EUR/USD in the following months.

Support Levels Proved Durable but may still be Vulnerable

• The ability of the EUR/USD to climb from lows last week and not go below the 1.05300 realms was important. However, the early lows of last Monday did come within sight of the ratios seen on the 6^th of January.
• Market sentiment remains fragile regarding the direction of the Federal Reserve and financial houses appear braced for an aggressive U.S central bank.
• Jerome Powell’s comments this coming Tuesday are certain to cause a fast market and support levels could be tested if his words are hawkish regarding U.S. monetary policy.

EUR/USD Weekly Outlook:

The speculative price range for EUR/USD is 1.05075 to 1.07110

The start of this week’s trading will give a solid perspective on the amount of nervousness that may exist in the EUR/USD.  The 1.06300 to 1.06100 levels should be watched and if they begin to be challenged another drop below the 1.06000 could quickly develop. Trading before U.S. Federal Reserve Chairman Powell speaks could prove dangerous, and day traders should have their full arsenal of risk-taking tactics ready. Positioning a trade before Tuesday’s Fed testimony to the Senate will be an outright gamble. Although Powell will certainly try not to cause market mayhem, the EUR/USD will react.

However, traders also need to be ready for the next big event which will unfold on Friday. The Non-Farm Employment numbers will get plenty of attention, and so will the Average Hourly Earnings data. The combination of jobs statistics and inflation numbers will present a test for speculators and price velocity in the EUR/USD will be generated quickly.

The notion that the EUR/USD came within sight of 1.06920 on Wednesday of last week may intrigue bullish speculators who believe higher values can be attained. However, they might be wise to wait for momentum which passes the 1.06500 to 1.06600 realms first and shows the ability to sustain value upwards before jumping into buying positions. For the EUR/USD to have a surge higher this coming week that is durable, a weaker-than-expected jobs number will likely have to come from the U.S., along with data that shows inflation is possibly weakening. Quick-hitting trades for speculators are advised in the coming days with narrow price targets.