After touching lows on the 1st of May which challenged the 1.06500 level, the EUR/USD began to find buyers and a strong upwards surge developed on late Thursday and into Friday.
- Speculators proved they have the desire to wager the end of last week. They might have gotten slightly ahead of their outlooks, but the EUR/USD did climb upwards from lows seen on Wednesday when the 1.06500 level was tested.
- The upwards wave of buying began on Thursday and built into a powerful move Friday with the publication of U.S jobs data.
- A high of nearly 1.08140 was seen on Friday before selling came into the market again and the EUR/USD went into the weekend near the 1.07583 mark.
The ability of the EUR/USD to finish at a higher level this past week compared to the value it started with will be welcome news for bullish traders of the currency pair. The values the EUR/USD closed with were last seen in the second week of April, but this was when the currency pair was actually caught in a downtrend. It hasn’t been since the 2nd of April that the EUR/USD has seen its current ratio while in the midst of an upwards climb.
Near-Term Nervous Sentiment in the EUR/USD
Trading in Forex, including the EUR/USD has been a wicked wagering landscape for a handful of months. However, last week’s U.S economic data may have been a rather important development for the outlooks of financial institutions. Gross Domestic Product came in weaker than anticipated, the falling growth numbers may slow the U.S economy and present traders with the hope that eventually weaker U.S growth will help erode inflation. The U.S Non-Farm Employment Change also came in below expectations.
While inflation remains a concern for the U.S Fed, earnings data on Friday was slightly weaker than anticipated. Rising prices in the U.S remain a concern for the Federal Reserve and they said this on Wednesday when they said they are uncertain about what inflation will do over the mid-term. It should be pointed out that WTI Crude Oil prices came down last week, which may help battle inflation too. But short-term speculative prices must turn into trends and this has not happened yet. However EUR/USD traders did show confidence and bought the currency pair in a flurry on Friday while speculating on better values. Nervous sentiment remains and this was seen as the EUR/USD couldn’t hold onto its loftier values as Friday closed. This coming week may see a wide price range too.
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Starting Points for the EUR/USD This Week
German inflation numbers came in slightly below their expected results last week, which is perhaps a good sign for the European Union. However this data did not fuel a massive amount of EUR/USD buying. The ECB will conduct a virtual meeting this week, but it will not include a monetary policy decision, this will only come in June from the European Central Bank. The ability to go into the weekend above the 1.07500 mark will be looked upon favorably, but can the currency pair hold its ground and upwards momentum?
- Perhaps financial institutions may start wagering on the notion that the worst of the economic news from the U.S is now in and the Federal Reserve will be able to start becoming dovish.
- But betting on a change of direction from the Fed remains speculative taking into consideration inflation data from the U.S last week.
EUR/USD Weekly Outlook:
Speculative price range for EUR/USD is 1.06930 to 1.08910
Having produced a climb last week and a move above the 1.08000 level momentarily on Friday was an interesting development in the EUR/USD. However, the inability to sustain higher levels will cause nervousness for some traders as they contemplate tomorrow’s opening. If the EUR/USD can open with sustained trading above the 1.07550 level this would be seen as a positive.
Traders should also be aware that British banks will be closed tomorrow for their May holiday. This will make volumes within the EUR/USD lower than normal to start the day. Volatility might continue into Tuesday because of this, and then on Wednesday a host of European nations will be closed for a holiday. Last week’s higher finish was good news for the EUR/USD but the choppiness produced in the currency pair the past few months should serve as a reminder that outlooks remain cloudy and trading could stay speculative and without a firm trend.
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