Risk-adverse emotions certainly appeared to take hold in Forex late this past week and the EUR/USD correlated to the broad market as it went into this weekend around the 1.16250 mark.
The high for the EUR/USD was seen early last week, on Monday, when the 1.17890 mark was being challenged. However, from that point onwards the EUR/USD faced headwinds and optimism in the currency pair’s, ability to traverse upwards ran into concerns. Financial institutions are likely starting to become worried that U.S inflation may cause the Federal Reserve to remain rather hawkish regarding its interest rate policy.
Day traders who were caught in the move downwards likely were surprised by the speed of the velocity as the EUR/USD started to push through support levels. The notion the EUR/USD has gone into this weekend near its low watermarks will not help those who are stubbornly holding onto long positions in the currency pair. Trading on Monday is sure to be a barometer of news flow being created at this time via U.S. White House rhetoric.
Optimists who were buying the EUR/USD with the belief that better days were ahead regarding the U.S. and Iran conflict may have had their hopes fade as Thursday and Friday started to evolve. The U.S and China summit which some may have been counting on to produce hopes for a deescalation to the Middle East military crisis were likely disappointed. The EUR/USD was trading near the 1.17230 ratio on Thursday, but from there eroded in value, this as USD centric strength crept steadily into the broad Forex market.
The broad Forex market had been showing USD centric weakness for a couple of weeks rather steadily. This happened as financial institutions allowed themselves to hold better outlooks regarding the Iran conflict and the potential that lower energy costs could emerge in the mid-term.
- However, this past handful of days has seen WTI Crude Oil price remain firm and continue to challenge the 100.00 USD mark.
- This has an effect on the outlook of interest rates from the U.S. Fed and has a direct effect on USD centric viewpoints for Forex including the EUR/USD.
- Behavioral sentiment remains swift in the EUR/USD as emotions are bothered by loud rhetoric.
- Day traders need to remain cautious in the EUR/USD this coming week.
Speculative price range for EUR/USD is 1.15710 to 1.17050
The speed of trading in the EUR/USD continues to be a linchpin of volatility. Speculators without deep pockets who choose to participate need to understand the power that sentiment shifts are causing. This weekend’s developing news is sure to have an impact of the opening of trading tomorrow and anxious financial institutions need to be watched regarding early results. This coming week could offer another dose of wide differentials regarding starting and ending values in the EUR/USD from Monday – Friday.
The EUR/USD sank to lows that were traversed over five weeks ago this past Friday, and many other major currencies also lost value to the USD. While some traders may believe the selling has been overdone in the EUR/USD, betting on immediate upside in the currency pair may prove to be wishful thinking. The shifts of behavioral sentiment in the EUR/USD and other major currencies paired against the USD have been difficult to wager on via technical perceptions. Nervousness via a lack of clarity regarding the mid-term is certainly causing problems in the EUR/USD and this is unlikely to fade this coming week.
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Robert Petrucci has worked in the Forex, commodity, and financial profession since 1993. Important aspects of his work involve risk analysis and advisory services. As an advisor in a Family Office he maintains a conservative approach for wealth management and investments. Robert also works in private finance with investors and companies delivering financial and management services.
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