The EUR/USD has continued to provide speculative buyers with plenty of reasons to remain optimistic as the month of May gets ready to start. Certainly there are no guarantees and traders cannot pursue the EUR/USD blindly, risk taking tactics have to remain vigilant. However, the upwards momentum of the EUR/USD has been rather significant and the ability to come within sight of the 1.10950 ratio this past Wednesday is noteworthy. Speculative elements appear to be pursuing an optimistic attitude that the bullish trajectory will be sustained.
Yes, the EUR/USD went into this weekend having produced a selloff. The currency pair finished the week’s trading near the 1.10165 ratio. The selloff however was not violent and the ability to sustain a value above the 1.10000 level is important. Trading early this week will be light in the EUR/USD because of the May Day holiday on Monday being celebrated in many parts of Europe, but traders should pay attention because U.S financial houses will be working. The U.S Federal Reserve will release its FOMC Statement this coming Wednesday, and Friday will see the Non-Farm Employment Change numbers and earnings data.
The move higher in the EUR/USD is not a one-way street and traders need to remain cautious as they wager on the Forex pair. However, it is likely that the expected interest rate hike from the U.S Federal Reserve which will be announced this Wednesday has already been factored into the price of the EUR/USD. This consideration leaves the door open for a choppy and perhaps volatile reaction to the rhetoric which will come from the U.S central bank regarding its outlook for another June increase.
U.S Growth Numbers Weakened and All Eyes are on Fed Outlook
Having touched highs on Wednesday of this week and then experiencing a selloff which took the EUR/USD to a low around the 1.09940 ratio on Thursday is of interest. The EUR/USD responded to this low with renewed buying and a high of nearly 1.10450 was seen on Friday, before a slight selloff going into the weekend. U.S Advance GDP numbers this past Thursday were weaker than anticipated and financial houses may have used the numbers to demonstrate buying power, but more importantly potentially durable support.
The push higher in the EUR/USD technically is intriguing and higher support ratios are incrementally forming via chart perceptions. The price of the EUR/USD were one year highs and the last time the currency pair sustained trading within its current heights was in the first week of April last year. Significantly for speculators the last time the EUR/USD experienced its current price slightly over one year ago, it was within a rather strong bearish trend downwards. Now the trend for the EUR/USD appears to be bullish and this may attract additional wagers to the upside.
- Day traders must stay realistic and use price targets that are not overly ambitious, risk taking must acknowledge that reversals in the EUR/USD are frequent and can be dangerous if too much leverage is being used.
- A U.S Federal Reserve increase of 0.25% is expected this Wednesday for the Federal Funds Rate; it is the central bank’s rhetoric which will cause volatility in the EUR/USD.
- Resistance for the EUR/USD currently looks strong around the 1.10400 to 1.10500 values, and traders should be prepared for these levels to create choppiness if tested near-term.
EUR/USD Outlook for May 2023:
Speculative price range for EUR/USD is 1.08800 to 1.11200
Trading in the EUR/USD this past month was rather bullish and support levels near the 1.10000 to 1.09700 should be watched in the coming days. It is possible that cautious trading will take hold in the EUR/USD over the next couple of days until the U.S Federal Reserve’s pronouncements. Afterwards, speculators need to be braced for a reaction to the Fed’s outlook.
The weaker than expected growth numbers from the U.S this past Thursday set the stage for more speculative buying of the EUR/USD, but traders should not target prices that are far beyond market prices technically. If the Federal Reserve sounds surprisingly hawkish this could spur selling and cause support levels to be tested around 1.09100 to 1.08800.
There are no sure bets in Forex, but the EUR/USD seems to have a definite air of speculative buying surrounding the currency pair. If the EUR/USD surpasses the 1.10400 level this Wednesday and sustains this value, the currency pair could march higher and a challenge of the 1.10900 mark could develop again. Traders looking for the 1.11000 value to be exhibited may be correct, but wagering on this level could produce a lot of pain if done too early. Traders should be patient and listen to the Fed’s remarks in the middle of this week to gauge behavioral sentiment which will affect trading results the entire month of May.
Ready to trade our monthly Forex forecast? Here are the best Forex brokers to choose from.
