Speculators who were on the correct side of the rocket blast higher in the EUR/USD on Tuesday of this past week were hopefully able to cash in profits. For those who held onto the EUR/USD going into this weekend with the currency pair now traversing around the 1.17250 ratio, things may not feel so secure. Sentiment shot the EUR/USD higher early this past week when the Iranian ceasefire was announced.
However, the ceasefire between Iran and the U.S feels at best fragile now. This weekend’s attempt at concluding a deal between the two sides has failed. Now the broad markets are sitting on a knife edge as they await what the Iranian response and the U.S White House reactions will be. The global markets opening tomorrow morning are sure to be volatile, the EUR/USD will not escape this dynamic. Nervous selling of the EUR/USD may be demonstrated early on Monday.
EUR/USD Outlook and Velocity
The ability to rise sharply last week proved the EUR/USD had many people of influence in financial institutions sitting around who believed the EUR had been vastly oversold. The velocity upwards in the EUR/USD did correlate to the broad Forex market, but the gains upwards in the EUR/USD did stand out as a high flyer. However, now that the failed negotiations must be digested early tomorrow, another set of circumstances will confront large traders.
Outlooks remain precarious in Forex. The EUR/USD certainly got some positive news based on less fear regarding rising oil prices last week, but that may change quickly in the coming days. If the price of WTI Crude Oil jumps early on Monday and becomes sustained, this may cascade into a slew of risk adverse trading. USD centric strength should be watched closely on Monday. And if rhetoric from the U.S White House matches the concerns of large players in Forex, the shift of sentiment may occur quickly.
Day Trades and the EUR/USD
The speed of the movement upwards last Tuesday in the EUR/USD didn’t really have much of an opportunity to be taken advantage of by day traders who likely reacted after the spikes occurred. The highs seen on Wednesday almost matched the current values of the EUR/USD where it is now this weekend.
The gains last week in the EUR/USD, certainly proved what many thought about the currency pair having been vastly oversold since the start of the Iranian war.
But the fact that the EUR/USD did not finish above the 1.18000 level which is where the currency pair was before the onset of the war shows that some caution remained.
Day traders may want to watch tomorrow’s opening and gauge existing sentiment.
And speculators should also note that the vast speed the EUR/USD displayed last week was on Tuesday and Wednesday.
Meaning, not only the opening of the EUR/USD should be worried about this coming week, shifting sentiment could make the entire week volatile.
EUR/USD Weekly Outlook:
Speculative price range for EUR/USD is 1.15400 to 1.17700
Price action in the EUR/USD will be fast in the coming days. If the Iranian ceasefire fails to hold in the coming days, traders may start to lean heavily into USD centric strength positions once again. The selling of the EUR/USD in the early days of the Iranian war in March may be seen again. But sentiment awaits developments which will come quickly today and into the early days of this coming week.
Risk management will be crucial in Forex in the days ahead. Traders who pursue the potential of solid returns must understand that reactions being demonstrated in barometers like WTI Crude Oil, 10-Y Treasury yields and U.S equity indices will cause dynamic results in the coming days. Forex is set to have quite a week of results in the coming days, and some of the price action may not be friendly. Those betting on downside to develop may find opportunities, but they should be careful because shifting sentiment remains very dangerous potentially.