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After a lower finish on Friday as the weekend approached, the EUR/USD currency pair opened with a higher flourish Monday morning. However, the currency pair maintains a well-known cautious range that is clearly becoming a battleground for financial institutions as they get positioned for what is set to be a week full of potential risk events not only for Forex, including the EUR/USD, but global markets as a whole. Retail traders who want to pursue the EUR/USD need to understand dynamic impetus will be delivered near-term which will certainly make quick hitting trading attempts volatile and possibly include plenty of velocity.
EUR/USD Rebounds Face Fed Uncertainty and French Debt Concerns
The U.S Federal Reserve will deliver their FOMC Statement on Wednesday. The U.S central bank is not expected to raise interest rates this week after having done so in September, but inflation does remain sticky because of more expensive energy. USD centric attitudes are dominating Forex and have continued to create headwinds for upwards momentum in the EUR/USD to form.
There are also growing concerns regarding the debt situation of France which has become a loud talking point and will likely stay newsworthy as the French elections draw closer this spring. Meaning the EUR/USD lower depths which are being tested continues to signal that while upwards moves will certainly occur, that there are reasons for reversals lower that are testing support.
EUR/USD Holds Near Recent Lows Despite Monday’s Rebound
Retail traders should understand that whipsaw action – if they have limited funds and ability to ride EUR/USD storms out – will occur throughout this week. Large players and financial institutions will position themselves ahead of the U.S Fed pronouncements and then likely react in what may seem a counter-intuitive manner afterwards. The EUR/USD is near 1.12115 for the moment in fast action.
On Friday the currency pair finished near 1.12015, but before that close the EUR/USD touched the 1.11850 vicinity earlier and sustained lower price action which followed. This morning’s upwards swing has been strong, but not earth shattering and the currency pair will be looked upon as still performing within lower realms. Financial institutions via commercial reactions may have believed the EUR/USD was oversold on Friday, but the currency pair is not likely to escape its lower month long depths unless a major change of sentiment develops suddenly and this is not likely to happen – so traders should remain realistic about perspectives.
How Equity Markets and Oil Prices Could Influence EUR/USD
Speculators may enjoy the temptation to try and catch what they believe will be momentum swings in the EUR/USD within the lower realms being tested. This certainly appears to have been a valid tactic last week when resistance levels above proved durable. Short and near-term conditions will likely remain rather focused on the U.S Fed’s rhetoric, but nervous global equity markets cannot be forgotten.
If selling action remains a dangerous part of the equity indices, this could cause additional USD centric strength to be seen. While it may not seem related higher WTI Crude Oil prices could be a nervous part of market sentiment which could affect Forex and the EUR/USD presently. Day traders must remain open to the idea that market movements will be met by reversals as outlooks remain unclear – if not negative for the time being.
Fed Decision and US Elections Keep Volatility in Focus
Short and near-term retail traders should get married to a position, because large players will be trying to take advantage of moves and could be cashing out profits rapidly. While Friday’s sell off was strong, this morning’s buying action in the EUR/USD is a reminder momentum shifts will happen fast over the coming days. Wednesday’s Fed announcement will not be the end of volatility, because financial institutions are also weighing their outlooks regarding U.S mid-term elections on November the 3rd, which will also influence sentiment.
EUR/USD Short-Term Outlook: Key Support and Resistance
Simply put retail traders need to be careful today as swirling winds motivate EUR/USD positions. Patience will be needed and the use of leverage should be considered carefully before committing to a position. Last week’s late selling pressure are likely not gone and can be considered a signal that negative moves will be seen, along with reversals that try to counteract the lower depths.
EUR/USD Short-Term Outlook: Key Support and Resistance
EUR/USD’s Monday rebound has not yet established a clear change in direction. Last week’s late selling pressure remains a reason for caution, while the recovery shows how quickly short-term momentum can reverse. With the Fed decision approaching, traders should remain alert to sharp moves in either direction and consider position size and leverage carefully.
The immediate levels to watch are:
Level | Price |
|---|---|
Current resistance | 1.12175 |
Current support | 1.12110 |
Upside target | 1.12240 |
Downside target | 1.11930 |
A sustained move above 1.12175 would bring the upside target at 1.12240 into focus. A break below 1.12110 would shift attention toward 1.11930. Neither outcome is assured: with sentiment unsettled, an initial break may reverse rather than develop into a sustained move.
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