The EUR/USD went into the weekend near the 1.09410 level after producing a high on Friday near the 1.09725 ratio, before a slight reversal lower. The apex value on Friday was last seen on the 11th of May. However, this time the rather strong value was produced after a week of solid gains and central bank confirmations from the ECB and Federal Reserve which seemingly have made financial institutions more confident about anticipated outlooks. The value near 1.09725 seen in the second week of May occurred as the EUR/USD was starting to ebb lower.
The ability of the EUR/USD to climb from a low of about 1.07300 on early Monday and move upwards the remainder of last week was a bullish outcome. More importantly, were the incremental steps made higher and the rather strong price velocity, which occurred on Thursday when the European Central Bank sounded hawkish while raising their interest rates, compared to the U.S Federal Reserve’s pause and remarks on Wednesday.
EUR/USD Move Higher is within Sight of Mid-Term Resistance Levels for Traders
The rapid move higher in the EUR/USD was certainly welcomed by bullish speculators of the currency pair who had been anticipating a renewal of the upwards momentum seen earlier this year. The EUR/USD was able to trade near a high of around 1.10920 in late April and early May, and there is no doubt some traders are eyeing these values as targets. However, day traders without deep pockets should remain realistic in their pursuit of higher prices, and be willing to cash out bets when profits have been registered. There still are questions ahead regarding U.S Federal Reserve policy which could cause some volatility for the USD in the days and weeks ahead.
The pause in interest rate hikes from the U.S. Federal Reserve achieved last week had been widely anticipated. The question now is if the halt to raising interest rates will become permanent, or if it will only prove to be a ‘skip’ – meaning another hike will happen in July. Investment houses definitely showed bullish appetite regarding the EUR/USD last week, but the last time the Forex pair began to hit these higher ratios it did turn into rather choppy results for many.
Fed Rhetoric this Week will Come via Jerome Powell and John Williams
- It is a U.S banking holiday tomorrow and volumes will be less than normal in Forex globally and this will affect the EUR/USD
- John Williams the Federal Reserve President of New York will speak Tuesday and could cause a reaction from EUR/USD traders briefly.
- Fed Chairman Jerome Powell will testify in Washington on Tuesday and Wednesday before Congress.
EUR/USD Weekly Outlook:
The speculative price range for EUR/USD is 1.08300 to 1.10650
The gains by the EUR/USD have been strong and traders cannot count on the price velocity seen last week to continue into the coming days. However, the trend upwards is attractive for speculators who continue to perceive that there is additional upside momentum to be found. Yet, shadows do lurk regarding the potential of the U.S. Fed to raise rates in July.
Support levels near the 1.09200 should be watched by traders, reversals lower in Forex is natural and a move towards the 1.09000 may be a rather short-lived move. If the 1.09000 were to prove vulnerable, this could set the table for a test of the 1.08800 vicinities, but this may be overdone and a good place for bullish EUR/USD traders who believe other moves higher will develop.
Bullish sentiment in the EUR/USD is likely to remain rather appealing this week, and EUR/USD traders may be looking at the GBP/USD and its results as a comparison and feel the EUR/USD has more room to grow. Traders should keep risk management practices in place and not bet blindly on upwards momentum. If the EUR/USD starts this coming week with strong results and maintains its 1.09300 level, it may be a clear signal for speculators that a move towards 1.10000 could develop. However, aiming for the 1.09600 to 1.09800 prices may be a better conservative position in the short term.
