- The EUR/USD had a solid week taking into consideration its ability to go into this weekend around the 1.08750 ratio, this after going into the previous weekend around the 1.08550 vicinity.
- The EUR/USD did touch highs near the 1.09460 mark early, though it did give back value after this apex. The ability to finish this week with strong price levels comparatively indicates some optimism among financial institutions wagering on the currency pair.
- Global Forex remains in a fragile position as a lack of clarity continues to cause headaches for large commercial traders, but USD centric weakness has continued to factor into trading. This coming week the U.S Federal Reserve will release its FOMC Statement on Wednesday.
- No interest rate cut is expected from the U.S Fed, but traders have clearly grown more ambitious regarding their outlooks about a potentially weaker USD.
U.S inflation data released this past week came in weaker than anticipated. But the Federal Reserve will continue to express some caution in its upcoming Fed Statement. The problem for the Fed is that President Trump will not agree with the U.S central bank’s caution. At some point Trump is certainly going to start pressing publicly for lower interest rates from the Fed. Last week’s lower CPI and PPI inflation data will be used to pressure the Fed, but an interest cut is not going to be seen this week.
Behavioral sentiment while very fragile regarding broad market outlook may be growing used to the rhetoric from President Trump. Reactions for the EUR/USD could also come because of impact generated via talk about tariffs on the European Union. Financial institutions which clearly started buying the EUR/USD around the 1.04000 level in early March have generated bullish momentum in the currency pair. The ability to traverse the 1.09400 plus vicinity early last week was another sign buyers remain active. Yet, a lack of clear outlook may cause headwinds to get stronger and start to cause resistance to be produced if large players think financial institutions are getting too optimistic about upside.
The EUR/USD did manage to maintain its near-term higher range when a one month chart is looked upon. However, it can also be seen the EUR/USD has been trading above the 1.08400 mark since the 7th of March rather steadily which means the gains have not been exaggerated. Forex continues to be affected by the U.S White House rhetoric as much as any influence.
- The decision to create more debt and spark spending in Germany certainly helped the EUR/USD in early March, but this was also a direct result of President Trump saying European nations need to spend more of their own money on defense.
- The E.U economy remains lackluster and its rather fractured inability to create cohesion remains an obstacle.
- The EUR/USD has done well in the past couple of weeks, but resistance above the 1.09000 level should be watched carefully.
Since trading above the 1.05000 level in early March the EUR/USD has picked up momentum. The currency pair has done relatively well since the middle of January when it was trading below the 1.02000 ratio, but it has come with a fight. The recent upsurge in the EUR/USD and ability to touch highs last week was important, but intriguingly the values now being seen in the currency pair were also seen in the immediate days after the U.S election in November.
Traders should take a look at six month technical chart to consider the notion that behavioral sentiment remains influx. The thought that financial institutions have returned to a cautious mode and are no longer overly risk adverse is a solid sign for the EUR/USD, but there will be additionally challenging moments ahead. The notion that the Fed will sound cautious this week has already been factored into the EUR/USD, the question is how President Trump will respond to the central bank’s timid behavior. If Trump speaks forcefully about lower interest rates, financial institutions may actually wager on him being able to make lower interest rates happen. Be careful of sudden volatility in the EUR/USD this week.
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