- Since touching highs around the 1.18400 level on the 1st of July, the EUR/USD has seen a sharp move lower when a one month technical chart is looked upon.
- However, day traders pursuing their ambitions have likely tried to catch movements higher based on the notion the EUR/USD has also oversold the past few weeks.
- Yet, the storm clouds that have gathered over Forex including the EUR/USD have not cleared, in fact the outlook has become more murky.
- This past week saw a surge higher in the EUR/USD which challenged the 1.17225 vicinity only to falter quickly and essentially produce the 1.16200 level in a short time.
- Day traders need to understand the level of nervousness in financial institutions has increased, there is also a notion that USD centric weakness that cascaded into Forex from early April into late June was overdone.
ECB and Fed in the Spotlight
The ECB will meet this week and announce their interest rate decision, but they will not change their Refinancing Rate, in fact the European Central Bank will likely sound cautious. This will be a reflection per their discussions with the U.S Fed which will make their FOMC interest rate decision in the following week. There are a large amount of shadows that are engulfing the U.S Federal Reserve at this moment. President Trump clearly does not agree with the interest rate policy of the Fed. However, Jerome Powell doesn’t seem to mind proclaiming his belief the U.S economy is in an uncertain period.
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Traders tired of tariff talks and interest rate considerations cannot be blamed. But technically the EUR/USD after having attained highs early July has seen a bearish retreat, and the ability of the currency pair to see sustained trading below 1.17000 is rather interesting. Near and mid-term outlooks for the EUR/USD are likely going to continue colliding and this will lead to additional choppiness. Traders need to understand that the next two weeks of Forex price action is likely going to be periodically volatile.
Caution Desired but Outlook Being Speculated
The EUR/USD may look rather comfortable when a three and one month chart are being looked upon. Both still show a rather bullish traverse higher for the EUR/USD and this may be an important clue.
- Yes, the EUR/USD has sold off incrementally the past few weeks, but financial institutions are still likely leaning into notions of a weaker USD mid-term.
- The EUR/USD is almost within a rather desirable trading ground for speculators to test where the shifts are going to develop next in Forex.
- The U.S economy has shown some signs of strength recently via retail sales and a solid manufacturing report from the Philly Fed.
- If the U.S inflation story can remain polite the Fed will continue to be pestered by the White House to lower interest rates.
- But will Jerome Powell show any signs of helping the White House in a week and a half?
EUR/USD Weekly Outlook:
Speculative price range for EUR/USD is 1.15875 to 1.17300
Having fallen well below the 1.17000 level might make the EUR/USD attractive to bulls who believe the currency pair needs to be higher. However, ‘needs to be higher’ is different than will be higher. In other words, the current price of the EUR/USD is battling short-term lower marks because nervousness in financial houses remains. The lack of clarity will continue this week and this will lead to volatility.
Day traders will need to be cautious in Forex and the EUR/USD. A major test of sentiment will continue to be seen because of President Trump’s rather blustery rhetoric regarding the U.S Fed and tariffs. The White House will try to put a positive spin on all possibilities, but financial institutions will want to see evidence that calm will return. The EUR/USD does look oversold in its current territory, but day traders looking for upside should be cautious and practice solid risk management. If new lows are produced and the EUR/USD falls below 1.16000 in a sustained manner, this will tempt more buyers, but it will be an indication short-term sentiment remains extremely risk adverse.
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