The EUR/USD will begin its trading this coming week near values it traversed on the 10th of December. The significance of the one month timetable is not the important thing technical and fundamental evidence traders should be looking at, it is the fact that the 10th of December values were being traded just before the U.S Federal Reserve made its interest rate announcement then.
The EUR/USD will begin trading early tomorrow morning near the 1.16329. Having started this past week healthily above the 1.17000 mark around the 1.17200 vicinity and experiencing a quick drop, the EUR/USD was not able to muster a sustained drive upwards longer than 12 hours.
The currency pair dropped to a low of nearly 1.16850 on Monday of last week and then did go to a high of nearly 1.17445 on Tuesday, but the EUR/USD faced more selling. The pressure downwards certainly increased and by late Thursday the 1.16400 ratio was being challenged.
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Friday’s Price Action and Reading the Signals
U.S jobs numbers came in worse than expected on Friday, typically financial institutions might have leaned into a weaker USD at that juncture based on the potential of a more bearish outlook regarding the Federal Reserve and the potential of rate cuts. The Fed is supposed to always monitor the U.S job market and inflation. The Average Hourly Earnings met expectations too, so again the outcome in some ways didn’t translate into what would have typically been expected in Forex. The USD got stronger instead of weaker. The EUR/USD finished the week near lows.
Yes, the EUR/USD did fall to about the 1.16165 vicinity briefly on Friday. Yes, holiday trading was certainly in effect still with low volumes most of last week. But the jobs numbers were being monitored by financial institutions and the EUR/USD selloff is still rather odd considering the results of the economic data from the U.S. So what was it that cause the USD to get stronger? Was it risk adverse sentiment because of concerns about the Middle East and rumors swirling as the Iranian regime’s power is being put to a severe test by its people? Maybe, but maybe not.
EUR/USD and The Week Ahead
The week ahead for the EUR/USD and Forex will be intriguing. Gold is high again, which is a signal that not only speculators are active, but a potential warning that risk adverse buying is in force.
- This could weigh on the EUR/USD if investors remain nervous in the days ahead.
- Also, the knowledge that full volumes will be seen in the days ahead now that the Christmas and New Year’s Day holiday are finished should be a consideration.
- The EUR/USD looks like it may have been oversold, but nervous sentiment may be tested early this week just like it was before going into the weekend.
- Day traders need to be careful.
EUR/USD Weekly Outlook:
Speculative price range for EUR/USD is 1.15890 to 1.17500
Perspectives about the U.S economy will be heard this week. Analysts will also be heard when they are talking about the Iranian situation and a flight to safety by financial institutions. Behavioral sentiment may remain rather nervous. But then again, perhaps a lot of this will simply be noise and some of this interpretation wrongheaded. The holidays have concluded and the fact that the EUR/USD is once again near values it was before the U.S Fed cut interest rates on the 10th of December should be taken into consideration.
The EUR/USD looked rather cheap then, and it may appear to be oversold now. But speculators need to be cautious and not assume a simple reversal will occur tomorrow that will appease financial markets and show everything is calm. Day traders need to watch the markets and not get caught up in fear mongering, but they should try to read sentiment. Nervous conditions may persists this coming week. Looking for higher movement for the EUR/USD may feel correct, but buying when financial institutions may remain nervous could be wagering against the short-term trend. The EUR/USD could see some big moves this week.
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