The EUR/USD will open near the 1.05585 this week. A high for the EUR/USD was made on early Tuesday of last week, when the currency pair touched the 1.06945 vicinities momentarily. The movement of the EUR/USD higher since touching a low of nearly 1.04940 on the 13th of October may have started to look promising for speculators who thought a sustained track higher could potentially touch highs seen in mid-September. This when EUR/USD values around 1.07730 were seen and might attract new targeted buying looking for this mid-term resistance level, but clearly the currency pair began to trade lower again last week.
The EUR/USD had reacted positively in the wake of a speech by Fed Chairman Jerome Powell made in mid-October that the U.S Fed would likely not raise its interest rates on the 1st of November. Powell essentially tried to calm the markets by letting this information be known early, while still expressing the potential that down the road the U.S. central bank could still hike the Federal Funds Rate. The ECB on Thursday of last week promptly held its ground and stayed consistent, the European Central Bank kept policy in place as Europe continues to struggle with lackluster economic conditions.
USD Advance GDP was a Trigger in EUR/USD Possibly Last Thursday
Shortly after the ECB had a calm press conference, the U.S. released its Gross Domestic Product numbers and it came in with a strong gain. This surprised many financial institutions. While the Fed will likely not hike interest rates this coming Wednesday, it did set into motion again the notion, the U.S will likely keep their borrowing rates high for a longer time than expected. U.S. consumers continue to flex their muscles. The EUR/USD made a low around the 1.05225 level on Thursday. Yes, a reversal upwards did occur afterward, but the move higher was limited.
Going into the weekend the EUR/USD was flirting with the lower realms of its one-month technical charts. Speculators who believe the EUR/USD is oversold at the current price levels cannot be blamed, but betting blindly on upside price action to develop and become sustained remains speculative at best. The U.S. Fed will release its FOMC Statement this week and trading may be quite choppy before and after this report. However, it is also U.S Treasury yields on bonds that are causing a storm in Forex, combined with worries about the situation in the Middle East.
EUR/USD Hit by Risk Adverse Sentiment Like Other Major Currency Pairs
- Nervous financial markets are still causing a run toward the USD as a safe haven still, traders looking for a shift in sentiment this week may be a bit too optimistic.
- The short-term is likely to remain rather tentative as financial institutions try to manage their mid-term outlooks.
- The U.S. will release U.S. jobs numbers this Friday, which could factor into Forex and cause more turbulence in the EUR/USD by the end of this week.
EUR/USD Weekly Outlook:
Speculative price range for EUR/USD is 1.04775 to 1.06410
Traders who want to continue pursuing lower values with the EUR/USD should remain cautious too, because a strong price velocity lower would likely have to be propelled by additional negative news developing and affecting global financial markets. If financial institutions remain calm about conditions in the Middle East it is possible a move lower in U.S equity indices could cause problems for the EUR/USD.
However, traders may be best served by looking to take advantage of short and near-term volatility which could produce a rather technical range until clearer outlooks are provided. Yet, it is unlikely that more optimism and a clear viewpoint of the mid-term are suddenly going to emerge this week. The U.S Fed, high yields from U.S Treasuries, and nervous stock markets are all adding to fragile behavioral sentiment. Quick-hitting trades looking for realistic targets may serve day traders well in the coming days, risk management certainly needs to be used also.
