The EUR/USD dove on Friday; this after the currency pair had already experienced plenty of selling on Thursday. After touching a high on early Monday of last week near the 1.10530 ratios, the EUR/USD began to incrementally give up its highs. While the early move lower may have been perceived as a natural cycle and one worthy to bet on for upside price action, this likely didn’t work out well for bullish speculators. The EUR/USD fell to 1.09440 which may have been perceived as a safe support ratio on Wednesday and did get a momentary bounce upwards. However, what followed the rest of the week may have had nightmarish results for many traders who choose to pursue a move higher that didn’t materialize.
After reversing upwards on Wednesday from its lows the EUR/USD climbed to a high of nearly 1.10075 but then began to show signs of nervousness as the broad Forex market started to rattle. Suddenly the price velocity of selling on Thursday got stronger, and then on Friday support levels for the EUR/USD became even more vulnerable. While the U.S. produced rather poor consumer sentiment numbers, stubborn inflation in the U.S. remains a worry for U.S. Federal Reserve watchers who fear another potential interest rate hike in June.
Economic Concerns Regarding Global Growth Casting a Shadow for EUR/USD
While the stubborn U.S. data should not have been surprising to Forex traders, signs of poor economic growth elsewhere certainly spooked the broad market and the EUR//USD was sold off and mirrored results from other major currencies. Inflation remains high in Europe, the U.K. produced negative GDP numbers, and the economic outlook is complicated for North America, Europe, and even Asia. The selloff of the EUR/USD was fast and when the 1.09000 broke on Friday and the currency pair was not able to reestablish value above this ratio, selling got worse.
The EUR/USD is Near April Values Not Seen Since the 10th of April
- The EUR/USD fell to its one-month low on Friday, and its inability to provide a solid reversal higher before going into the weekend will make traders nervous.
- Monday’s opening in the EUR/USD should be monitored closely for reactions, and traders who have bullish inclinations will want to see the currency pair first regain some stability.
- Tuesday will see GDP numbers published for the E.U. and this could create impetus for the EUR/USD.
- CPI data will come from the E.U on Wednesday and this will also factor into the EUR/USD.
EUR/USD Weekly Outlook:
The speculative price range for EUR/USD is 1.07780 to 1.10110
Having traded to highs early last week may have made bullish speculators of the EUR/USD feel as if new price levels would certainly be seen as the week progressed like the 1.11000 target. This obviously did not happen and serves as an unwelcome lesson regarding the need to always have risk management regarding stop loss orders working as speculative positions are being wagered. The EUR/USD is suddenly trading at one-month lows and support near the 1.08350 mark should be watched. If this level fails to prove durable, the EUR/USD could falter lower quickly.
Behavioral sentiment will be important this week and speculators will react to broad market conditions. While many financial institutions are likely wagering on the U.S Federal Reserve to pause their interest rate hikes sooner rather than later, economic data showing slow growth in the U.K and Europe is not helping the EUR/USD near-term, and Gross Domestic Product numbers from Europe this week will be worth watching for reactions.
Bullish speculators who believe a natural reversal higher will occur may want to remain conservative early this week to make sure price stability in the EUR/USD happens. A move above the 1.09000 level would certainly be welcomed, and the ability to sustain value above this ratio would be a positive development. Risk-taking tactics should be done with care this week, because the broad markets may continue to prove rather choppy.
