EUR/USD: Weekly Forecast 3rd September - 9th September

The EUR/USD went into this weekend near the 1.07730 ratio which was a low for the week and came within sight of depths created on Friday the 25th of August. The trading landscape for the EUR/USD remains dangerous and speculators who have believed the currency pair has been oversold have likely found trading rather challenging. The EUR/USD did climb early in the week and attained a high around the 1.09445 mark on Wednesday the 30th of August.

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However, the upward momentum of the EUR/USD proved short-lived. The highs seen this past Wednesday did touch higher values produced on the 15th of August. But the highs being spoken about in the middle of August were actually taking place as the EUR/USD was within the firm grasp of bearish sentiment and trading lower. The EUR/USD was trading near the 1.12780 level on the 18th of July.

EUR/USD has Traded Lower but Remains Correlated to the Broad Forex Market

Speculators are likely hearing about the rather negative economic data that is being presented in Europe particularly from Germany as recessionary pressures are having an effect on the EU and its outlook. However, traders need to also remember the downward momentum in the EUR/USD is correlating to the broad Forex market and the results from the currency pair are not a stand-alone event. Other major currencies are suffering against the USD too. And the EUR/USD actually remains in the middle ground of its six-month technical charts.

Nervous sentiment has certainly produced strong selling in the EUR/USD, but conditions have not been a one-way avenue downward. Last week’s price action certainly showed dynamic buying earlier in the week, but – yes, was overtaken by more selling sentiment. This leaves EUR/USD traders within a challenging landscape, but they are not alone. The U.S will be on a holiday tomorrow and trading volumes will be light, so speculators early this week should be careful and wary of sudden volatility erupting in what appear to be calm markets. This Tuesday’s return of full volume could produce rather interesting action in the EUR/USD.

EUR/USD has the Attention of Financial Institutions and Day Traders

  • The EUR/USD certainly feels oversold to many day traders, but the price action of the currency pair has remained bearish and selling before going into the weekend was strong.
  • Speculators this week should be prepared for more nervousness as sentiment gets interpreted because there will be a lack of significant economic data from the EU and U.S. in the coming days.

EUR/USD Weekly Outlook:

The speculative price range for EUR/USD is 1.06710 to 1.09360

The wide price range in the EUR/USD has certainly tested the fortitude of traders over the past handful of weeks. Volatility in the EUR/USD has been newsworthy and is getting a lot of media attention. Perhaps this is a good thing and shows that we may be reaching the height of market nervousness. Yes, things could grow more nervous, certainly if bad news comes from the U.S. regarding downgrades via rating agencies for corporate banks. However, if the markets can begin to regain their composure it is possible the selling within the EUR/USD which has dominated the past month and a half might start to run out of power.

Finding the turning point in a Forex pair when direction begins to change and sustain movement in an opposite direction is a dangerous endeavor. Timing the market has been known to make many traders lose their money, instead of simply pursuing a trend that is known. The movement downward in the EUR/USD has been strong, even if it has been believed overdone. Support near the 1.07500 to 1.07300 marks should be watched this week, if they do not hold this would be a bad sign possibly for the EUR/USD and mean another leg down could be demonstrated.

Without any major economic data coming this week, the EUR/USD will have to rely upon existing sentiment. If calmer conditions develop in the broad markets, perhaps the EUR/USD could start to climb again like it tried to early last week. The EUR/USD reflects the amount of nervousness in the broad global markets quite well. Some traders may rightly believe the currency pair has been sold too much, but knowing precisely when the trend will reverse higher and be sustained in the EUR/USD has proven difficult this summer.


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.