The bullish trend of the EUR/USD which started technically in the middle of April ran into a sudden and dangerous surge of selling on the 7th of June, and bearish momentum remained in evidence in the following weeks as lows got tested.
- The EUR/USD exchange rate closed near the 1.07108 mark as trading concluded on the 28th of June.
- When the currency pair opens again for financial institution transactions as July starts it will surely be put through a series of tests immediately.
- The bullish trend of the EUR/USD, which had become quite pronounced since the middle of April, touched a high of nearly 1.09167 on the 3rd of June.
- The EUR/USD was trading rather comfortably around the 1.09005 ratio on the 7th of June, a Friday, when the currency pair fell in what can be compared to a cliff dive. By the end of the 7th the EUR/USD was trading near the 1.07960 level.
The impetus of the selling in the EUR/USD was fast in the first week of June, but this was not the end of the troubles for the currency pair which saw another bloodletting on the 12th of June. The EUR/USD was near the 1.08525 mark having recovered from a low around the 1.07200 ratio which had been seen on the 11th of June. The EUR/USD fell from the 1.08525 area to a low of nearly 1.06680 on Friday the 14th of June. This depth was approached on the 21st and the 26th of June too.
European Election, ECB, French Vote and U.S Fed Influences
The accomplishment of finishing the end of June above the 1.07000 ratio, in fact above the 1.07100 ratio, may be seen as a sign financial institutions believe the worst of the potential news has been seen from E.U Parliamentary outcomes, the call for a French election by Macron (the first round of which will be held on the 30th of June), the ECB decision to cut the Main Refinancing Rate and then sound absolutely neutral afterwards, and the U.S Federal Reserve’s cautious approach. Yes, the list above is long and is a reason behavioral sentiment was hit several times in the EUR/USD over the past three weeks causing strong price velocity.
Unfortunately the EUR/USD may not be out of the woods completely yet. Tranquility may prove difficult as July starts, this as the first round of voting from France begins to show results. The second round – which is the most important – will be held on the 7th of July. Again, financial institutions will look at the voting results – particularly from the 7th – and weigh them against their outlooks and the potential economic impact the election outcome will have on the EUR/USD. After Germany, France is the second most vital economic cog in the EUR/USD and politics from the nation does affect sentiment.
Top Forex Brokers
EUR/USD Unknowns and Experience for Financial Institutions
But before day traders panic and try to wager on what the outcome of the French elections will be and its effect on the beginning of trading as July starts, speculators need to remember a lot of the potentially volatile outlooks have been traded into the EUR/USD already.
- Yes, the EUR/USD could trade lower again if financial institutions do not get the outcome they hope for via the French elections.
- However, day traders can clearly see the volatility that has already been seen in June was likely a reflection of speculative positioning and reactions from the unknowns circulating.
- Experienced large players may suspect the EUR/USD has been oversold, but day traders should be careful about being too speculative about this notion as trading begins this coming week.
EUR/USD Outlook for July 2024:
Speculative price range for EUR/USD is 1.06110 to 1.09200
More volatility will be seen in the EUR/USD. The biggest question is which direction the biggest moves will be delivered. Technically the fact the EUR/USD touched support levels near lows the past handful of trading days may indicate this is where financial institutions see a bottom price. But that depends strongly on perspective. The outcome of the French elections will not be fully known until the 8th of July. When trading starts on the 1st of July only the first round results will be known, not the finished decision of the French voters and this outcome is the important factor.
If the right wing wins financial institutions may rest a bit more comfortably than a left wing victory, but again the unknown direction of fiscal decisions and its effects on behavioral sentiment cannot be counted upon. Retail traders should be extremely cautious in early July and simply try to ride the coattails of technical trends they perceive are being demonstrated. Reversals could abound and if there are surprises in the coming week and a half, this will create a rather dynamic price range. By the 10th of July perhaps some clarity will exists and a more reliable trend will emerge for the EUR/USD, if so this might be upwards momentum, but this is a speculative notion.
Ready to trade our monthly forecast? We’ve made a list of the best European brokers to trade with worth using.