EUR/USD: 29th January - 4th February

The EUR/USD continues to display bullish characteristics, but after reaching a high the past week not seen since April of 2022, the currency pair reversed lower.

The EUR/USD went into the weekend near the 1.08655 ratios.  On the surface, this is a pretty good result for speculators who have maintained a bullish perspective of the currency pair. Unfortunately for day traders the EUR/USD has also delivered a strong amount of volatility while attaining it’s upwards trajectory and this was a full-on display last week. The EUR/USD climbed to a high of nearly 1.093000 on Thursday, but the currency pair stumbled lower on Friday.

The incremental climb upwards in the EUR/USD has sustained bullish signals, but pursuing the Forex pair is not particularly easy if a trader is over-leveraged and downward reversals knock them out of their positions too quickly.  The coming week promises to also produce fast results which may be dynamic again. The U.S. Federal Reserve will release its Monetary Policy Statement on Wednesday, along with an anticipated rate hike of 0.25%. To top off this coming week’s trading action the U.S jobs numbers will be released on Friday. It should also be mentioned the Bank of England will announce its interest rate policy this Thursday.

The EUR/USD 1.09000 Ratio was Targeted and Hit by Speculators but not Sustained

Having finished the week of trading near the 1.08655 ratios may seem like a defeat for some bullish traders, but perspective is important.  The highs reached on Thursday had not been seen since April of 2022, and the ability of the EUR/USD to flirt with values above the 1.09000 level has not gone unnoticed. The climb higher in the currency pair will never be a one-way direction and it would be foolish to pursue buying positions blindly. Traders need to remain realistic.

Technically the EUR/USD remains within sight of the 1.09000 juncture and traders wagering on this target likely remain abundant. U.S. fundamental economic data last week did show that growth is slowing in the States, and on Friday consumer spending also displayed signs of restraint.

U.S Federal Reserve will be a Focal Point on Wednesday of this Week

  • The U.S. central bank is expected to raise interest rates by 0.25% on Wednesday, but many financial houses expect the Federal Reserve to also sound a less aggressive interest rate stance.
  • If the U.S. Fed begins to show signs that it accepts the U.S. economy is slowing and states that a more dovish interest rate policy will develop over the mid-term the EUR/USD could get stronger.

EUR/USD Weekly Outlook:

The speculative price range for EUR/USD is 1.07800 to 1.09810

Support levels within the EUR/USD have demonstrated an ability to incrementally rise.  The 1.08100 ratio now looks to be a bottom tier for the currency pair regarding any strong movements lower. Certainly, the EUR/USD could penetrate this level and traverse lower, but from a speculative point of view, the incremental increase of the Forex pair’s value is attractive. However, traders need to anticipate a large amount of volatility this coming Wednesday and for the range of the EUR/USD to broadly widen leading up to the U.S. Fed’s pronouncement before and after. If the Fed disappoints financial houses, the EUR/USD could find itself challenging support levels rapidly.

Traders however are likely anticipating the U.S. Fed to say they are going to remain vigilant regarding the U.S. economy and will consider only raising interest rates by small measures of 0.25%, and that the U.S. central bank will actually consider halting rate hikes in the mid-term. If the U.S. Fed signals they understand the U.S. economy is showing signs of slowing down, the EUR/USD would likely move above the 1.09000 level and potentially sustain value above this mark. The first couple of days of trading this coming week will likely see speculative positions placed and traders need to be braced for swift price action. If the 1.08700 mark exhibits a solid base and the 1.08900 juncture flirts consistently, a penetration of the 1.09000 mark could spark more bullish momentum and see last week’s highs brushed aside promptly.


Robert Petrucci
Robert Petrucci has worked in the Forex, commodity, and financial profession since 1993. Important aspects of his work involve risk analysis and advisory services. As an advisor in a Family Office he maintains a conservative approach for wealth management and investments. Robert also works in private finance with investors and companies delivering financial and management services.