- The EUR/USD is once again above the 1.17000 level and enters this week of trading having established a fairly demonstrative move upwards since lows were touched on the 1st of August.
- Showing the EUR/USD remains heavily influenced by sentiment being generated via U.S economic data, the currency pair seems to have financial institutions leaning into bullish notions, even as definite clouds shadow Forex.
- USD centric weakness is at core of Forex trading and this has been the case since the first week of February if you are merely looking at one year technical chart. Complexity within Forex has led to dynamic volatility the past handful of months.
- The trend upwards has certainly not been steady. Last week was no different. A low in the EUR/USD around 1.15900 was seen on Monday, on Tuesday the currency pair touched a high of nearly 1.16920 after U.S CPI numbers showed consumer inflation was tame.
Thursday Crisis Followed by Buying Once Again
On Wednesday the EUR/USD climbed above the 1.17300 ratio momentarily. And then on Thursday U.S PPI inflation data came in higher than expected, this caused selling in the EUR/USD and a fall to almost 1.16310. The producer prices from the U.S caused a sense of confusion and mixed sentiment certainly sparked the selling. But then incremental buying started again, and going into this weekend the EUR/USD certainly demonstrated upwards momentum when looking at the past week on a whole.
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The U.S Fed is still believed to be in a position in which it will have to lower the Federal Funds Rate in September. Fed Chairman Powell and President Trump do not see eye to eye on interest rates, but a faction of FOMC members of the Fed who vote seem to have enough muster to cut the interest rate by 0.25 basis points on the 17th of September. This notion is serving perhaps as a backbone for buyers of the EUR/USD who are maintaining a weaker USD outlook.
1.17000 as a Barometer and Jackson Hole Fed Meeting
The 1.17000 level for the EUR/USD will certainly be watched early this week to see if the level can be sustained. While there isn’t too much economic data that will cause major volatility unless there are surprise outcomes, the upcoming Federal Reserve’s Jackson Hole Symposium at the end of this coming week could stir the EUR/USD.
- If FOMC members speak out in Wyoming and contradict Fed Chairman Jerome Powell this would cause volatility.
- The Fed is often quite quiet and respectful among members, but there is a clear situation developing in which certain FOMC members are now in open disagreement with Jerome Powell.
- Talk of interest rate cuts at the Jackson Hole meeting later this week could cause some turmoil in Forex.
- If the 1.17000 is sustained going into the conference, the EUR/USD may find more buyers if the Fed begins to show Jerome Powell is losing some influence.
EUR/USD Weekly Outlook:
Speculative price range for EUR/USD is 1.16190 to 1.18100
The EUR/USD has shown the ability to reestablish the 1.17000 level. But its value has proven vulnerable the since early July when a high of nearly 1.18300 was penetrated. Forex traders have had to deal with mixed sentiment and this has caused shifts in the EUR/USD which have been pronounced. The notion mid-term that the USD should be weaker still holds some water, but the sudden emergence of higher Producer Price Index numbers this past Thursday was a reminder not all is easy.
Inflation concerns are legitimate per the tariff implications that continue to swirl around global commerce. Behavioral sentiment might be under the impression the USD should be weaker, but volatility is likely to remain quite energetic in the EUR/USD this coming week. Day traders need to be careful and try to gauge the outlook of the broad market. The upside may look tempting in the EUR/USD but traders should not get too confident. Take profit orders that look for quick results may prove worthwhile.
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