The EUR/USD traded in a rather turbulent fashion the past week. Having gone into the New Year’s holiday rather confidently above 1.10000, the EUR/USD was quickly smacked lower in Forex as trading opened on the 2nd of January. Volumes in Forex were extremely light early last week and as the EUR/USD moved lower it essentially hit the 1.08950 ratio by Wednesday.
A rather solid reversal upwards then occurred and a high of 1.09730 was seen on early Thursday. But this was not the end of the show, more excitement awaited speculators who were brave enough to trade in light holiday markets.
The EUR/USD was trading near the 1.09250 mark on Friday before the U.S. jobs numbers were presented. Upon the publication of the Non-Farm Employment Change and Average Hourly Earnings, the EUR/USD sank to a low of nearly 1.08770. The plunge lower may have happened as first glances of the jobs data showed more hiring than expected in the U.S., but then a rather intriguing thing happened. The EUR/USD began to climb higher with strong price velocity and almost touched the 1.10000 level.
EUR/USD Holiday Trading and Interpretation of U.S Jobs Data
It is likely that trading institutions that were active on Friday suddenly realized the jobs data was not as dangerous as it appeared, while the forward month came in slightly better than anticipated, back months were revised downwards regarding hiring results. Suddenly fear of renewed aggressive rhetoric from the U.S Federal Reserve likely eroded. Trading in the EUR/USD went back into a polite mode and finished the week near the 1.09400 mark.
As tomorrow’s trading opens speculators need to brace for the potential of additional price velocity, particularly as the London trading facilities open. Large institutional players will likely react to the trading from the past two weeks of results in the EUR/USD and the currency pair is probably going to have some early volatility. Of interest for technical traders may be the notion the EUR/USD was trading near the 1.09400 mark on the 21st of December, as light holiday trading started to take effect before offices started to shutter for the Christmas break.
EUR/USD Starting Point and Behavioral Sentiment
As the EUR/USD gets set to start this week global risk appetite has not been too affected the past couple of weeks during the light holiday trading. This means as Forex opens tomorrow and the EUR//USD essentially starts where it left off before holiday trading volumes began to erode, the currency pair will likely begin to mirror the outlook which remains rather optimistic regarding the U.S. Federal Reserve’s softer tone. The Consumer Price Index numbers from the U.S. later this week will be a serious test for the EUR/USD.
- Early trading on Monday will be a solid indication of behavioral sentiment for the EUR/USD.
- If the currency pair moves higher and sustains value above the 1.09500 to 1.09600 levels this could be viewed as a bullish signal.
- U.S. inflation data this coming Thursday is likely to get plenty of attention and will cause swift reactions for the EUR/USD.
EUR/USD Weekly Outlook:
Speculative price range for EUR/USD is 1.08960 to 1.10900
The past two weeks of trading in the EUR/USD gave speculators a chance to test market sentiment in very light trading conditions. However the return of full volume on Monday and Tuesday of this week will return Forex to its normal conditions, and day traders need to be braced as financial institutions begin to participate. The EUR/USD remains within sight of it higher realms, but just as easily - traders with a bearish perspective may focus on support levels and believe a move below the 1.09300 level would indicate downwards sentiment still lingers.
However, traders looking for upside momentum from the EUR/USD to be demonstrated cannot be blamed. The first couple of days this week could deliver a rather wide range as large players return to the EUR/USD, but if bullish momentum is demonstrated early this could be a sign that financial institutions may believe the currency pair is oversold, particularly if it trades below the 1.09000 level. If the EUR/USD does climb and sustains value above the 1.09800 level, the 1.10000 mark will certainly become a target.
