The EUR/USD finished near a value of 1.09445 going into the weekend. On Tuesday of last week, the EUR/USD did trade around the 1.09275 ratio. While the close on Friday was slightly above the low for the week, bullish traders will not be starting any parades with eager optimism regarding the EUR/USD. A high of around 1.10650 was hit on Thursday, as U.S Consumer Price Index numbers not only met expectations but were slightly below the estimated inflation data. The EUR/USD mirrored the broad Forex market and the rush upward was significant on Thursday.
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The drive higher didn’t last long, however, and the reversal lower grew stronger. The 1.10000 level again became a battlefield and later on Thursday the EUR/USD was not able to sustain momentum above this ratio. On Friday there were a few attempted moves upwards and the 1.10000 mark was challenged, but values could not be sustained and the selling which intensified, began to test important support levels as the weekend approached.
Nervous Sentiment as One Month Technical Support Comes into EUR/USD Focus
Economic data from the E.U this coming week will be rather light, and a holiday on Tuesday in certain E.U countries may make for lighter than normal trading volume tomorrow and Tuesday if traders take advantage of a long weekend. As the EUR/USD trades within sight of crucial one-month support levels, financial institutions which have been showing plenty of signs of risk-averse sentiment since the middle of July may remain rather cautious. The choppy results of the EUR/USD which has seen a sustained bearish trend develop since the 18th of July when the currency pair touched the 1.12795 level briefly, almost feel like distant memories.
Traders who believe the EUR/USD has been oversold may be proven correct eventually, but jumping in front of the current bearish path could be expensive and dangerous. The EUR/USD is trading in a healthy manner and is certainly correlating to the broad Forex market as risk-adverse trading has heightened on rating agency downgrades of U.S Treasuries and some mid and small-size banks the past two weeks. U.S. inflation numbers were mixed last week, and it is likely the U.S. Federal Reserve will have to stop raising interest rates over the mid-term. The question now becomes whether support levels of the EUR/USD can prove durable.
The 1.10000 EUR/USD Level in Focus for Traders
- Having broken below the 1.10000 level this week again, and not being able to successfully challenge the mark above in a sustained manner should make bullish EUR/USD traders cautious.
- Support levels of 1.09400 to 1.09200 should be monitored by traders.
EUR/USD Weekly Outlook:
The speculative price range for EUR/USD is 1.08910 to 1.10650
The end of trading last week continues to look bearish in many respects technically, but support levels if maintained early this week could spark some speculative buying from traders who are anticipating upwards momentum to eventually generate. The problem for bullish traders of the EUR/USD is about getting on the train too early, in other words – betting on an upwards direction while the EUR/USD simply consolidates within its lower value range – remaining in the station.
Speculators should not be overly ambitious regarding upwards price action; there have been few signals to indicate another jump upward is suddenly going to erupt. Too much nervous sentiment remains within financial institutions for the moment. Quick-hitting bets by speculators are urged this week as outlooks are tested and sought. In the meantime, choppy conditions are likely going to continue to be seen. Until the EUR/USD is able to sustain a move above the 1.10000 level there is unlikely to be a wave of speculative buying emerge that shows price velocity higher.
