The EUR/USD went into the weekend near values it began last Monday with, this as financial institutions seem to have established a sense of equilibrium as a new outlook emerges.
- The EUR/USD finished the week of trading near the 1.06520 mark, on last Monday the EUR/USD also was around this price vicinity.
- Certainly plenty of vigorous trading fluctuations were seen last week, but technical and fundamental traders may have both come to the conclusion the currency pair has established a rather well maintained price range.
The shift in behavioral sentiment in financial institutions which essentially caused massive volatility in the EUR/USD and broad Forex market in the previous week seems to have been digested. Yes, Federal Reserve Chairman Jerome Powell caused a stir this past week when he admitted that inflation doesn’t appear to be eroding as many economists had believed it would, but many financial institutions had already prepared for the change in rhetoric from the Federal Reserve.
Powell Offered No Real Surprises to Financial Institutions
And while Powell’s words didn’t come during an FOMC meeting announcement, his speech about stubborn prices made clear that the previous week’s higher CPI data was a legitimate concern. Traders took the EUR/USD from nearly 1.08675 on the 10th of April to the 1.07330 level. By Friday the 12th of April the EUR/USD was essentially testing the price vicinity it went into this weekend with as traders fought through Forex action the past five days.
The current value of the EUR/USD may look low to many biased traders who favor a stronger European currency, but the value realm now being demonstrated did show a rather intriguing upwards momentum after hitting a low of nearly 1.0600 on Tuesday, coming close to retesting the mark on Wednesday and then after touching a depth around the 1.06100 on early Friday. The EUR/USD finished almost solidly within the middle of its technical price range for the week.
High of Nearly 1.06900 in EUR/USD Established on Thursday
The high for the EUR/USD last week climbed around the 1.06900 ratio, but was pushed back. This momentum lower shows that financial institutions may be accepting a change of outlook that will extend into the late summer. The EUR/USD is now testing marks that it has not traversed since the middle of November 2023. The currency pair is back within the price range technically that it explored in 2023 before financial institutions started to become bullish based on the belief the Federal Reserve was going to issue more dovish rhetoric in December of 2023, which did occur.
- The 1.06000 to 1.07000 price range for the EUR/USD currently looks like fair market value, but there are additional obstacles ahead.
- A growing concern exists that the European Central Bank will have to cut interest rates before the Federal Reserve. However, the ECB would prefer to stay reactive and not be proactive.
- The EUR/USD did trade lower in November and October of last year and the 1.05000 ratio was tested.
EUR/USD Weekly Outlook:
Speculative price range for EUR/USD is 1.05930 to 1.06890
While it may be comfortable to believe the EUR/USD has found a new technical price range which will show durability moving ahead, traders should not rest easily. The volatility seen the week before last demonstrated the EUR/USD can move lightning quick. Economic data this week will see Manufacturing and Services PMI data from Europe on Tuesday, GDP numbers from the U.S on Thursday, followed by important inflation statistics from the U.S on Friday. All of this data will affect current behavioral sentiment in the EUR/USD.
While many traders may presume upwards motion will develop for the EUR/USD in the mid-term once again because of the perception the currency pair has been oversold. Resistance may prove to be an interesting touchstone for speculators of the EUR/USD in the short and near-term if too much upside is found. But traders should also not be overly ambitious regarding more downwards trajectory to be seen in the EUR/USD. If economic data from the U.S continues to be slightly stronger than expected this could create some headwinds which cause the currency pair to see more selling and the technical range to be tested.
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