The EUR/USD went into the weekend within sight of its highs attained early on Friday, and continues to find speculative buying persists with the currency pair.
The EUR/USD will start the week near the 1.09930 mark, which is a price that has last seen sustained values in March and April of 2022. Yes, the EUR/USD did trade above the 1.10000 level briefly in early February of this year, and this past Friday the currency pair did trade near a high of 1.10800 before faltering. However, sustained prices near these levels have not been accomplished for over a year and speculators who believe the EUR/USD can go higher are certainly looking at their long-term charts to gain perspectives.
But before day traders get overconfident in the bullish trend of the EUR/USD, they should note the reversal lower going into the weekend was caused by nervous behavioral sentiment which still exists in Forex regarding potential USD strength. While inflation data from the U.S came in weaker than anticipated on Wednesday and Thursday of last week, Consumer Sentiment numbers came in stronger than expected. Also, higher Crude Oil prices are giving voice to Federal Reserve officials who are still expressing a desire to raise the Federal Funds Rate higher to battle inflation which they view as stubborn.
The ability to climb over 1.10000 on Friday and move even higher was significant. However, traders need to remain realistic, if the reversal lower didn’t cause concern then it should be remembered the threat of more interest rate hikes from the U.S Fed lurks. The U.S central bank is almost guaranteed to hike by another quarter of a point in early May, and concerns are legitimate that another 0.25% in June could follow. This may produce some shadows over the EUR/USD this week as behavioral sentiment reacts to the outlooks of financial institutions.
There will not be a significant amount of U.S. economic data this week or from Europe. Inflation concerns still continue to cause alarm in both places and while the EUR/USD has certainly seen a trend upwards continue to produce rather solid results, day traders should remain vigilant for volatility and the potential for a reversal lower.
- The ability of the EUR/USD to reach highs on Friday not seen in over a year is enticing, but the reversal lower before going into the weekend is a caution sign.
- The EUR/USD may produce choppiness this week as behavioral sentiment is affected by voices coming from European and American central bankers.
- The EUR/USD could also be affected by market sentiment created by results from the major equity Indices this week as their results are contemplated regarding economic outlooks.
The speculative price range for EUR/USD is 1.08810 to 1.10960
Sustained trading over the 1.09000 level last week was important and traders may look at this level as a strong support ratio. Having finished the week closer to the 1.10000 ratios, day traders may be tempted to aim for the higher levels seen early this past Friday, this before a stumble lower was produced before going into the weekend.
However, traders who are cautious need to monitor the trading of the EUR/USD for the first few hours on Monday before jumping into the water to pursue the currency pair. The trend of the EUR/USD has certainly been higher, but contrarians may believe the Forex pair has been overbought in the short term. If the 1.09500 begins to see a challenge lower, this could set off some alarm bells and cause the EUR/USD to move towards the 1.09300 to 1.09000 mark.
A move below 1.09000 may be viewed as being overdone and create more buying, however. The ability of the EUR/USD to climb cannot be discounted and traders with a longer time frame may remain confident in the currency pair’s track upwards. However, day traders must be prepared for a constant battle of cyclical reversals and trade with strict risk-taking tools always ready. The coming week for the EUR/USD is likely to produce a test of its known range and choppiness may persist near-term.