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After falling to lows in the middle of March, which essentially tested early January depths, the EUR/USD has recovered upwards momentum and is speculatively attractive.
The EUR/USD produced an astonishing month of trading in March. On the 15th, yes, the Ides of March no less, the EUR/USD fell to a low of nearly 1.05185 falling below previous depths displayed on the 7th of March and on the 27th of February. The lower values of the EUR/USD in fact tested prices not seen since the 5th and 6th of January. However, since hitting the 1.05185 mark only two weeks ago, the EUR/USD has done remarkably well and demonstrated a fight upwards.
As of this writing the EUR/USD is trading near the 1.08450 mark, and the month of April appears that it will begin its trading within the higher elements of the EUR/USD one-month range. The past two months of trading within the currency pair have been a rollercoaster and this has been fueled by the antics of the U.S Federal Reserve which has exhibited a rather consistent ability to create surprises. In addition to the U.S. central bank, the corporate banking crisis within the U.S. and Europe over the past couple of weeks has certainly had a role in the volatility of the EUR/USD too.
Behavioral sentiment however has seemingly become more tranquil in the past few days, while there are no guarantees the calm demeanor of financial institutions will continue, the EUR/USD has likely benefited for now. The EUR/USD traded above the 1.08000 ratios from the middle of January until the beginning of February with a rather solid capability.
The reversals lower in February were caused by an aggressive U.S. Federal Reserve outlining its concerns about inflation and reasons why it needed to hike interest rates more. Things have seemingly changed in the past two weeks in late March because of weakness in the corporate banking sector, but more surprises could be in store. If the U.S. Fed is forced to become more dovish, trading sentiment could propel the USD/EUR higher. On the 2nd of February, the EUR/USD briefly traded near the 1.10300 ratio, by the 7th of February the EUR/USD was near the 1.06700 level. Reversals happen and traders need to be prepared with solid risk management ready at all times.
Technical traders may not be pleased with the thought that they should pay attention to economic data from the U.S and Europe regarding growth and inflation numbers, but it would not be a bad idea to monitor developing news. The past two months of trading of the EUR/USD has seen extreme fluctuations as the Fed has gyrated and financial institutions have also reacted to corporate banking worries.
If U.S. growth shows a slowdown and inflation statistics via the Consumer Price Index can display weaker results, the EUR/USD will likely react with a bullish trend. Some traders may believe that a more dovish U.S central bank has been digested into the price of the EUR/USD already, but the fact that the currency pair was trading higher frequently in early February, and on the 22nd and 23rd of March suggests more buying firepower potential could be seen.
- The 1.08000 ratio should be watched in the EUR/USD, if trading can be sustained above this mark it might indicate another bullish advance will occur.
- Recent volatility in the EUR/USD underscores the importance to use conservative leverage and have risk-taking tools in place while trading the currency pair.
- Reversals have been brutal and likely expensive for unprepared traders.
The speculative price range for EUR/USD is 1.07300 to 1.09490
Behavioral sentiment will rule the day in the EUR/USD. The near-term and first week of trading in April will be important regarding a perspective for what will develop. If the corporate banking sector crisis eases into the background and financial houses do remain calm, there is reason to suspect the EUR/USD could trade higher.
The EUR/USD could also be given impetus from the U.S. if inflation and other economic statistics make it favorable for the U.S. Fed to become more dovish. However, if the Fed suddenly starts to talk about raising interest rates again and the 1.08000 level is proven vulnerable, lower prices could certainly be seen.
Support near the 1.07700 should be watched and if the 1.07500 were to be tested then lower values could be produced. The past two months of trading in the EUR/USD have been volatile, but have also produced solid speculative momentum near-term trends based on market sentiment. April may be a volatile month of results too for the EUR/USD.
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