The EUR/USD should be looked upon suspiciously by day traders. After falling to lows around the 1.14675 mark this past Wednesday, which tested values since on the 1st of August, the currency pair was able to stage a two day rally upwards.
- Finishing on Friday around the 1.15638 ratio will not ignite bullish parades by optimistic EUR/USD speculators. Instead they may remain quite agitated and cautious as tomorrow’s trading begins.
- While it is possible that financial institutions simply decided that the EUR/USD had traversed too low on Wednesday and now was the time to step in and buy the currency pair, broad market dynamics remain under a cloud of caution and uncertainty.
Nervous sentiment continues to be heard and this may create a rather difficult path ahead for solid near-term trends to develop.
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1.15000 Level in Sight is Not a Happy Place
The inability of the U.S Federal Reserve to take a strong stance during their last FOMC Statement has caused difficult circumstances in Forex. The EUR/USD was trading near the 1.17300 ratio when the Fed cut its interest rate by 25 basis points on the 17th of October, but after the U.S central bank said it did not know what its would do in December, the currency pair stumbled hard. The EUR/USD has correlated to the broad Forex market and is certainly a good barometer of current conditions.
Financial institutions are showing nervous sentiment. The ability to fall below the 1.15000 on Tuesday of last week and sustain values beneath until Thursday is a sign negative conditions are still rampant. While the EUR/USD does look like it is oversold, it will take a solid dose of positive impetus to spur additional buying power. The U.S government shutdown is nearly a one and a half month affair. The lack of official U.S economic data is making it hard on the Federal Reserve, but also difficult for analysts to produce solid outlooks. If the EUR/USD can sustain value above the 1.15500 ratio early this week it may be a nice sign that sentiment in the currency pair is starting to stabilize, but until additional positive economic insights are shared day traders should remain cautious and expect volatility to continue.
Lack of Insights and Headwinds Being Battled
The U.S did not publish its Non-Farm Employment Change numbers again this past Friday, this is the second jobs report that has not been filed.
- News about big layoffs in the U.S taking place within Amazon and UPS, and other companies are causing nervous sentiment.
- Can the Federal Reserve cut interest rates in December if they do not have enough official data?
- Financial institutions had obviously bought the EUR/USD based on the belief a cut would happen in the middle of October, but also had likely counted on another interest rate cut in December.
- The lack of proof for this outlook has caused headwinds for the EUR/USD.
EUR/USD Weekly Outlook:
Speculative price range for EUR/USD is 1.14450 to 1.16800
Having produced an upwards climb the past couple of days is interesting for bullish perspectives. However, day traders should watch the opening for the EUR/USD tomorrow to see if conditions can remain optimistic into the afternoon. Forex has proven difficult the past handful of weeks and trading will likely remain tricky for technical and fundamental speculation.
The notion that insights remain troubling is not going to help the EUR/USD and may be a reason for additional choppy trading scenarios to emerge. Positive impetus is needed to avert more risk adverse results which have been seen. Day traders who are keen on seeing the 1.16000 level re-emerge and higher cannot be faulted for their sentiment, but near-term ambitions should be kept realistic. The broad financial markets continue to look nervous and this may spur on more whipsaw action in the EUR/USD this coming week.
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