Threats of volatility still are shadowing the broad Forex market. The EUR/USD exhibited its high for last week on Monday when the 1.18750 area was challenged, but headwinds quickly erupted and incremental selling started to stiffen.
Traders should not be surprised by the rather strong gusts changing direction the EUR/USD at this moment. Nervousness and uncertainty remain distinct tastes in the mouths of financial institutions and large traders. Trading spreads are wide, and price differentials have increased the past few weeks.
The EUR/USD has correlated to the broad Forex market with jolts of volatility, but a seemingly strong ability to remain within the upper tier of its range. USD centric weakness is plain to see, but there are also clearly disruptions which sometimes create shifts that suddenly linger. Day traders looking to take advantage of momentum trajectories are likely facing difficult circumstances. Risk management needs to be kept strict moving forward.
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Economy, Data and A Lot of Noise
This coming week the U.S. will supposedly release its official jobs data via the Non-Farm Employment Change on Wednesday. No, this is not the normal publication cycle for the U.S. jobs statistics. A semi-government shutdown inflicted last week caused a delay in publication. Adding to the U.S. data parade this week will be Retail Sales on Tuesday and CPI inflation numbers on Friday. You have been warned.
Adding to the data are the mixed notions about economic outlook in the U.S. and a general state of uncertainty because of a lot of noise regarding versions of reality. If that sentence seems confusing, imagine how financial institutions feel trying to guess what is going to happen in the mid-term. And it is this sense of unease which is causing volatility in the EUR/USD and other currencies. It appears that many financial houses still believe the Fed will lean into a more dovish interest rates policy, but gauging the USD remains rather challenging except to say it appears the White House is comfortable with a weaker sentiment.
EUR/USD Higher Nervous Realms
The EUR/USD continues to traverse in a higher range. The last time the EUR/USD was within these higher sustained values was 2021. The ability of the EUR/USD to remain above 1.18000 is a sign financial institutions are comfortable with a weaker USD outlook.
- However, volatility and the threat of more volatile days ahead in the near-term is a real consideration for day traders.
- Looking for a slight move higher in the EUR/USD this coming week feels like a solid wager if technical support holds.
- The EUR/USD well above 1.18000 is not far-fetched and real, but if the currency pair falls below, this should not surprise speculators either – this as the EUR/USD fights within its current realm trying to establish an accepted equilibrium.
EUR/USD Weekly Outlook:
Speculative price range for EUR/USD is 1.17825 to 1.19020
The EUR/USD is trading currently within the upper ratios of its long-term charts, but it is below temporary apex mid-term highs that were outliers. This leaves the door open to more exploration of higher values that may not feel like overbought territory to financial institutions. The U.S data that will be published this coming week will impact the EUR/USD. However, it is the policy of the U.S. White House led by Treasury Secretary Bessent which may be most important and listened to, because it appears the Trump administration wants a weaker USD.
And this is what day traders should remember when they hear about jobs numbers Wednesday, and the significant inflation results this coming Friday, because a weaker USD may help the U.S. economy. However, day traders also need to remember this a game being played on a day-to-day basis in which the short-term even though it feels volatile to smaller speculators is not crucial for bigger institutions which have mid-term outlooks. In other words, the threat of EUR/USD fluctuations is much more significant for day traders compared to financial institutions which have a myriad of techniques to handle mid and long-term cycles in Forex.
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