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EUR/USD: Weekly Forecast 23th April


The EUR/USD produced a rather stiff trading range the past week as financial houses seemed to find a price equilibrium they agreed with before coming risk events on the schedule.

The EUR/USD finished the last week of trading slightly below its previous week’s finish. Yet the EUR/USD was able to show that it remains rather stable, and its ability to climb back from lows produced on late Monday the 17th of April near the 1.09100 ratios could be considered a positive sign by bullish speculators of the currency pair. Yes, the EUR/USD finished below its previous week’s marks, and the high for last week was at the start of its trading near the 1.10000 level early on Monday, but from Tuesday onwards the EUR/USD performed rather consistently.

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The consolidated price range of the EUR/USD the past four days of trading certainly produced reversals, but a range between 1.09200 and 1.09900 was rather consistent regarding support and resistance levels.  Speculators definitely need to be using stop loss and take profit orders to pursue the EUR/USD while it traverses within this consolidated range and they might have to endure another week of similar price action.

The current price of the EUR/USD was polite and creates the belief financial houses may be comfortable with the current value equilibrium.  Consolidation reacted to support and resistance levels rather consistently last week this as large institutions look forward to risk events regarding U.S. data this week, and the U.S. Federal Reserve’s interest rate pronouncement due in a week and a half.

This Tuesday will see CB Consumer Sentiment numbers from the U.S. and on Thursday growth data will be released via the Advance Gross Domestic Product results. What is problematic for the U.S. Federal Reserve is that American consumers have shown some strength, even in the face of stubborn inflation statistics. The U.S. central bank and financial institutions will want to see if U.S. consumers remain optimistic and if growth numbers remain above recessionary results. If the reports on Tuesday and Thursday of this week are better than anticipated, this could cause some headwinds for the EUR/USD regarding upwards momentum.

  • The inability of the EUR/USD to sustain highs above the 1.10000 level continues to indicate selling pressure is taking place because of concerns the U.S. Federal Reserve will remain hawkish in the near and mid-term.
  • While a 0.25% hike has been priced into the EUR/USD for early May, financial institutions remain unsure about what the U.S. central bank will do in June.
  • Stronger U.S. economic data this week could mean the Federal Reserve will have to consider a June interest rate hike also.

The speculative price range for EUR/USD is 1.09040 to 1.10340

The ability to climb off of lows seen early last week and having finished within sight of highs is intriguing for bullish EUR/USD traders, but they should remain cautious. This week’s U.S. data will likely be an important impetus for the near-term direction of the EUR/USD. Traders may want to see where the EUR/USD trades upon opening on Monday to get a feel for the behavioral sentiment.

If the EUR/USD climbs higher this may indicate financial institutions are positioning for potentially weaker U.S data this week. But traders need to be aware of speculative dangers, and consolidated price ranges sometimes suffer sudden breakouts. While support levels may be appealing as a place to wager on higher momentum, traders should take into consideration the potential results from U.S. data this week.

The range of 1.09000 to 1.10000 may appear rather attractive for day traders, but consistent risk management will be necessary for the coming days. The consolidated range of the EUR/USD could turn dynamic if consumer sentiment and growth numbers from the U.S. produce surprises. The week closes with important inflation data from the U.S. also this coming Friday. Traders will have to remain vigilant and know volatility could develop rapidly. While upside price action may be appealing for EUR/USD wagers, the near-term could prove rather dangerous.

EUR/USD

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