EUR/USD: Weekly Forecast 9th July

The EUR/USD enjoyed rather stellar gains for speculative bulls that may have been pursuing upwards momentum as the week finished with highs.

The EUR/USD has gone into the weekend near the 1.09680 ratio, which is within sight of the high made only a few hours before the Forex markets closed. While it would be easy to say the EUR/USD went up this week as predicted, based on the notion it was felt the currency pair had been oversold the prior week, this could also be foolhardy too. The big fact in Forex for traders is, including the EUR/USD, that luck plays a role in price movement while speculating for day traders.

The EUR/USD essentially was trading near the 1.08750 before the U.S jobs numbers were released on Friday.  While the Non-Farm Employment Change figures came in weaker than anticipated and might lead some analysts to claim the higher move in the EUR/USD happened because of this result, the fact is the Average Hourly Earnings from the States came in stronger than anticipated. The higher inflation number could have easily caused a selloff of the EUR/USD, but it didn’t.

The market facts are hard to know regarding why the EUR/USD climbed after the stronger than expected inflation numbers in the U.S, except to say perhaps financial institutions had braced for this potential outcome.  Meaning it is possible that the EUR/USD climbed after the U.S data because folks were already anticipating the results. Inflation has been stubborn in the U.S, and some people have been talking about higher interest rates from the Federal Reserve for the past couple of weeks.

However, technical traders may laugh at this and simply say, the EUR/USD had been oversold recently and the movement upwards was a reaction to this dynamic. Day traders who want to understand the reasons why the EUR/USD moved higher on Friday with force will be hard pressed to find answers, but there is one important fact – the EUR/USD did move higher. And the strong finish above the 1.0900 level puts it within sight of June values which challenged ratios significantly above current prices.

• Important U.S. inflation data will come this Wednesday and Thursday from the U.S via the Consumer Price Index and Produce Price Index readings.
• The better-than-expected U.S. data recently makes a Federal Funds Rate increase on the 26^th of July more likely, but perhaps financial institutions think the European Central Bank will have to be more aggressive than the Fed.
• The 1.09500 level early on Monday could prove to be an interesting barometer for the EUR/USD.

Speculative price range for EUR/USD is 1.08925 to 1.10175

Traders who were betting on upside momentum in the EUR/USD to occur last week may have been rewarded this past Friday.  However, trading conditions prior to Friday’s results were choppy and may have been difficult for speculators not using appropriate risk management. The highs the EUR/USD made going into the weekend were intriguing, and Monday’s opening should be watched. If support near the 1.09500 can be sustained this would be significant and show the EUR/USD may have found some stable buying momentum, but traders should remember June values after testing highs reversed lower.

The inflation data from the U.S this week will prove challenging for speculators. Inflation is expected to remain stubborn, so an interest rate hike in the later part of July has likely been priced into the EUR/USD. Unless inflation comes in remarkably higher than anticipated, the EUR/USD could see rather tranquil results. If values for the currency pair remain above the 1.09000 level comfortably, speculators may start dreaming about the 1.10000 mark once again in the EUR/USD. However, before overly ambitious bets are made on upwards momentum, traders need to consider last week’s results in the EUR/USD are not exactly clear as to why they happened. Meaning choppy conditions may be seen this week. Risk management should be practiced by traders to guard against volatility.