- The broad Forex markets in the eyes of some speculative analysts the past year have turned rather boring. Trading volumes via speculators has dropped over the long-term because of belief that price action has turned rather lackluster.
- Day traders who have been looking for more volatile results may have turned to equity indices and commodities such as gold over the past handful of months. But choppy results in the EUR/USD the past week may start to look attractive to many.
- Dynamic price action in Forex and the EUR/USD has started to produce signs of life recently. Sentiment shifts occurred rapidly last week as nervous financial institutions tried to weigh their outlooks regarding U.S Federal Reserve interest rate policy, and suddenly are dealing with renewed China tariff rhetoric from the U.S White House.
- On top of that the U.S government shutdown looks as if it may continue over the coming days. The EUR/USD saw its value drop below 1.17000 on Tuesday and suddenly found its value near 1.15420 by Thursday of this past week.
Slightly Higher Price Action Going into Weekend
The EUR/USD did curiously mount a bit of a buying attack on Friday, this as the broad markets turned nervous upon President Trump’s sudden focus on China again. Intriguingly, instead of financial institutions pumping money into the USD as a safe have wager, the EUR and some other major currencies gained against the USD. The EUR/USD went into the this weekend slightly below the 1.16200 level.
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While traders are not able to get official U.S government economic data because of the U.S shutdown, financial institutions clearly are trading on the assumption the Federal Reserve will announce another interest rate cut in late October. While another 25 basis point cut has likely been factored into the EUR/USD, the downturn in the currency pair since the last Fed FOMC decision on the 17th of September can be seen technically on a one month chart. Day traders should be careful of narratives surrounding the move lower in the EUR/USD over the past handful of weeks, because they are suspicious.
The 1.18000 Level as a Distant Memory
After trading above the 1.18000 level from the 16th to the 18th of September, downside action in the EUR/USD has stood out.
- The ability of the USD to gather strength continued into last week and only on Friday saw a brief move higher.
- Yes, reversals higher and lower in Forex remain a constant intraday part of trading, there are no one way avenues.
- However, financial institutions do have storm clouds circling above and these may continue to shift behavioral sentiment in the near-term.
- Traders tempted to believe the EUR/USD has been oversold may be proven correct in the mid-term, but downside pressure has been rather consistent.
EUR/USD Weekly Outlook:
Speculative price range for EUR/USD is 1.15710 to 1.17100
When the EUR/USD opens tomorrow it will prove worthwhile to see if Friday’s slight buying remains intact or if downside pressure mounts again. Support near the 1.16000 would seem to be important psychologically, but this ratio was penetrated lower on Thursday and lasted well into Friday, until Trump’s sudden announcement regarding China. Or was it financial institutions merely stepping in based on the belief the EUR/USD had been oversold?
While Forex markets have remained rather tame in some trading eyes over the mid-term, volatility in the EUR/USD has been rather productive. However, choppy conditions have certainly caused headaches for traders for more than a handful of months. Yet, the EUR/USD when looked at technically from three and six month charts does show that it is in higher terrain. And a glance at a one year technical chart also shows the gains the EUR/USD has made. Near-term concerns may continue to produce some storms for the EUR/USD because of nervousness in the broad markets. Support and resistance levels should be monitored closely this coming week and more choppiness should be expected.
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