- This coming week of trading in the EUR/USD is going to see volatility.
- The broad Forex market which has been reacting to shifts in behavioral sentiment since the start of January needs to brace for what may turn out to be the most important week of data from the U.S since the start of the year.
- Yes, a couple of weeks ago saw U.S Consumer Price Index data which caused widespread volatility in the EUR/USD and other major currency pairs with higher than anticipated inflation, this week could be more of a firecracker.
The EUR/USD went into the weekend near the 1.08175 ratio, which may be viewed as an accomplishment by bullish traders who have been watching the 1.08000 level as a key psychological mark. The EUR/USD did climb to a height of 1.08880 briefly on Thursday of last week, but this apex was quickly put into reversal and a low of 1.08000 came within sight about six hours later. Equilibrium has been fought over the past handful of weeks as financial institutions have become nervous about central bank outlooks.
Reasons for Concern about EUR/USD Volatility this Week
The U.S is set to publish crucial economic data this week which will stir emotions regarding the USD and particularly how the Federal Reserve is going to view the statistics. On Tuesday a Consumer Confidence report will be printed, on Wednesday GDP numbers are to be released and then topping off the data parade will be the Personal Consumption Expenditures Price Index statistics on Thursday. The Core PCE data is a significant measurement used by the Fed.
Technical traders who have been taking advantage of the prevailing range in the EUR/USD recently should acknowledge the coming U.S releases. The EUR/USD will see its range certainly become wider based on the results from the wave of reactions caused by the U.S reports, and speculators will see behavioral sentiment put to the test. Nervous conditions may be seen on Monday and build into Tuesday, but by Wednesday any semblance of calm trading conditions in the EUR/USD will likely erode. Thursday’s vital inflation numbers could cause bedlam in the currency pair and the broad Forex markets.
EUR/USD Ability to Climb Over the 1.08000 Level Important
Traders who have held onto the notion the EUR/USD had been oversold and the belief the currency pair should be over the 1.08000 level were rewarded last week. But the battle to maintain the 1.08000 ratio has not been easy and remains challenging. Having overcome the level on last Tuesday the EUR/USD was pushed back, Thursday’s run to high ground was important and shows bullish sentiment exist, but the reversal lower was a reminder that Forex trading remains complicated because of a lack of clarity regarding the Federal Reserve.
- If U.S GDP numbers are stronger than expected, this could set off an additional wave of EUR/USD selling.
- Thursday’s inflation data via the Core PCE Price Index could cause a volatile storm if the result is also higher than anticipated.
- However, if the U.S economy shows less growth and weaker inflation, the EUR/USD would see a bullish rush.
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EUR/USD Weekly Outlook:
Speculative price range for EUR/USD is 1.07110 to 1.09240
Traders have had to practice careful risk management the past handful of weeks; this should have them prepared for the coming days. Volatility is going to be delivered in the EUR/USD and the use of conservative leverage, along with stop loss and take profit orders will guard against sudden bursts of behavioral sentiment changes.
If the U.S produces surprisingly strong economic data which shows the economy is not slowing down, the EUR/USD could easily drop below the 1.08000 level and retest depths. Trying to trade the upcoming economic reports this week before the published numbers are known will be dangerous on Tuesday, Wednesday and Thursday. If U.S statistics comes in weaker, demonstrating growth is slowing and inflation has become less stubborn, the EUR/USD could soar. It is important week for Forex and the EUR/USD which is coming.
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