The month of August for the EUR/USD received plenty of attention as the currency pair sank to a low quite recently around the 1.07675 ratio last Friday on the 25th. The rather rollercoaster like ride of the EUR/USD the past three months has likely shaken the confidence of many traders who have plenty of experience, and perhaps surprised financial institutions. The EUR/USD was trading at a high of nearly 1.12700 on the 18th of July.
EUR/USD day traders who believed the upside price action would continue easily have likely paid a heavy price for betting on bullish sentiment. On the 1st of August the EUR/USD was trading near 1.09575 and many speculators may have believed the currency pair was vastly oversold at that juncture. As of this writing the EUR/USD is around the 1.09320 mark, and this is actually substantially higher than its value on the 29th of August, when the Forex pair was below the 1.08000 realm again.
Nervous Behavioral Sentiment and a Search for Optimism in the EUR/USD
Nervous behavioral sentiment has been rampant in Forex the past month and a half, even financial institutions have been surprised by the results. The price action of the EUR/USD when one and three month charts are looked at, offer a rather violent trading perspective, particularly if a trader was on the wrong side of the price action.
Having sparked upwards momentum in the past day after hitting lows and coming within sight of depths touched late last week, some optimism has begun to show a glimmer of hope. Traders who want to buy the EUR/USD because they believe it has been oversold the past month and half cannot be blamed. But day traders have likely found tough conditions the past handful of weeks, and this should serve as a reminder to practice risk management and stop loss orders while pursuing the EUR/USD. The ability to climb over the 1.09000 ratio again is important, the question is can this value be sustained in the near-term and lead to more buying action. Reversals lower the past month have been painful and swift.
The EUR/USD Reacting to U.S Data Once Again
The U.S has published interesting economic data the past few days, and it will continue on Friday the 1st of September. Weaker than expected statistics from the U.S has recently put speculative Forex positions into a stance which is expecting a weaker USD based on the U.S Federal Reserve having to turn less aggressive. Will this outlook prove to be short lived?
- GDP numbers released on the 30th of July came in lower than forecast in the U.S.
- The U.S Federal Reserve will certainly look at this result and it will monitor the jobs reports this Friday.
- If the Average Hourly Earnings numbers on the 1st of September meet expectations or are weaker than estimated this could spark additional EUR/USD buying.
EUR/USD Outlook for September 2023:
Speculative price range for EUR/USD is 1.08410 to 1.10800
Nervous conditions have been widespread in Forex and this has certainly caused a storm in the EUR/USD too. The selling action of the EUR/USD was fast in August and caught even experienced traders off guard. Risk taking tactics have to be maintained in September because nervous behavioral sentiment remains fluid. The price range of the EUR/USD has not been polite; in fact it has been dangerous.
Fears of more downgrades regarding U.S corporate banks are a potential hazard. However, if U.S economic data continues to come in weaker, this will certainly start to cause the U.S Federal Reserve reasons to lower their aggressive rhetoric, and perhaps spark additional weakness in the USD. If the EUR/USD can maintain above the 1.09000 in the coming days, and shows some price action that challenges 1.09700 to 1.10000 ratios higher, this could spark bullish traders who believe the worst of nervous behavioral sentiment has been seen.
However, the price action of the EUR/USD has continued to produce dramatic surprises. Day traders need to be careful and perhaps be content with quick hitting targets. If bullish traders are pursuing additional movement higher, the past month and half should be a strong reminder to use stop losses.
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