The EUR/USD went into the weekend near the 1.09100 ratios, finishing the week of trading near values it began close to at the start of last week. Technical trading actually has some rather strong merit to consider in the near term as financial institutions likely are looking at global central banks as facing the same dilemma regarding inflation and the potential of more interest rate hikes to come. European economic data produced stronger-than-expected German CPI statistics last week.
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The EUR/USD mirrored other major Forex pairs teamed against the USD. The EUR/USD gained as the week began by hitting a high of nearly 1.09775 on Tuesday. Only to start being pushed back and then hitting a low on Friday around 1.08340 before rising back above the 1.09000 level before going into the weekend. The rather choppy conditions in the EUR/USD could be viewed as a positive by day traders who like to wager on quick-hitting movements. However, the rather bumpy values being demonstrated also mean that solid risk management is needed to guard against moves that go against the chosen direction.
The 1.09000 Level will be Important Early this Week in the EUR/USD
With many U.S financial institutions expected to be quiet on Monday, and on holiday for the Independence Day celebrations on the 4th of July, traders should be prepared for the potential of rather flat market conditions. However, the absence of U.S traders could also open the door to sudden volatility if the Forex market is not prepared for large orders. The 1.09000 level should be watched as an important support level as the week starts.
The ability to maintain value in the EUR/USD after last week was finished may be interpreted rather bullishly by some speculators. While the European Central Bank certainly has expressed an aggressive stance to come regarding interest rate hikes, the U.S Federal Reserve may also find that it has to maintain its hawkish rhetoric and back this up with an interest rate hike in late July. However, this creates equilibrium perhaps too regarding outlooks.
Stronger than Expected U.S Growth Numbers Produced a Bearish Turn in the EUR/USD
- Better than anticipated GDP numbers from the U.S. this past Thursday sent the EUR/USD to new lows momentarily, that had not been seen since the middle of June.
- This is as traders interpreted the better-than-forecasted growth numbers as a reason why the U.S. Fed will have to hike its Federal Funds Rate again.
- Tomorrow important Manufacturing PMI data will come from Europe, German and French results should be watched.
- While recessionary data is showing its teeth from the E.U., unfortunately, E.U inflation statistics remain problematic setting the stage for additional rate hikes from the ECB.
EUR/USD Weekly Outlook:
The speculative price range for EUR/USD is 1.08640 to 1.10110
Choppy trading should be expected in the EUR/USD early this week with lighter-than-normal trading. Conditions near-term may remain a bit nervous taking into consideration the U.S. Fed will release its FOMC Meeting Minutes on Wednesday and U.S. jobs numbers will be published on Friday. If the Fed report indicates they are sincere about more interest rate hikes to come in July and later this year, this would be a confirmation of policy which may have been priced into the EUR/USD already.
The 1.09000 level is important and if it proves durable may find that it attracts speculative buying if the value can be sustained above. While the EUR/USD was pushed back from Tuesday’s highs, the notion that the EUR/USD remains slightly oversold may still exist within financial institutions which are still targeting the 1.09500 to 1.09900 realms. U.S. data at the end of this week will be important. Inflation results from the U.S Average Hourly Earnings data this coming Friday will be critical, if the result meets expectations, behavioral sentiment may remain calm which may be good for EUR/USD buyers.
