EUR/USD
The EUR/USD went into this weekend near the 1.07730 ratio which was a low for the week and came within sight of depths created on Friday the 25th of August. The trading landscape for the EUR/USD remains dangerous and speculators who have believed the currency pair has been oversold have likely found trading rather challenging. The EUR/USD did climb early in the week and attained a high around the 1.09445 mark on Wednesday the 30th of August.
However, the upward momentum of the EUR/USD proved short-lived. The highs seen this past Wednesday did touch higher values produced on the 15th of August. But the highs being spoken about in the middle of August were actually taking place as the EUR/USD was within the firm grasp of bearish sentiment and trading lower. The EUR/USD was trading near the 1.12780 level on the 18th of July.
EUR/USD has Traded Lower but Remains Correlated to the Broad Forex Market
Speculators are likely hearing about the rather negative economic data that is being presented in Europe particularly from Germany as recessionary pressures are having an effect on the EU and its outlook. However, traders need to also remember the downward momentum in the EUR/USD is correlating to the broad Forex market and the results from the currency pair are not a stand-alone event. Other major currencies are suffering against the USD too. And the EUR/USD actually remains in the middle ground of its six-month technical charts.
Nervous sentiment has certainly produced strong selling in the EUR/USD, but conditions have not been a one-way avenue downward. Last week’s price action certainly showed dynamic buying earlier in the week, but – yes, was overtaken by more selling sentiment. This leaves EUR/USD traders within a challenging landscape, but they are not alone. The U.S will be on a holiday tomorrow and trading volumes will be light, so speculators early this week should be careful and wary of sudden volatility erupting in what appear to be calm markets. This Tuesday’s return of full volume could produce rather interesting action in the EUR/USD.
EUR/USD has the Attention of Financial Institutions and Day Traders
- The EUR/USD certainly feels oversold to many day traders, but the price action of the currency pair has remained bearish and selling before going into the weekend was strong.
- Speculators this week should be prepared for more nervousness as sentiment gets interpreted because there will be a lack of significant economic data from the EU and U.S. in the coming days.
EUR/USD Weekly Outlook:
The speculative price range for EUR/USD is 1.06710 to 1.09360
The wide price range in the EUR/USD has certainly tested the fortitude of traders over the past handful of weeks. Volatility in the EUR/USD has been newsworthy and is getting a lot of media attention. Perhaps this is a good thing and shows that we may be reaching the height of market nervousness. Yes, things could grow more nervous, certainly if bad news comes from the U.S. regarding downgrades via rating agencies for corporate banks. However, if the markets can begin to regain their composure it is possible the selling within the EUR/USD which has dominated the past month and a half might start to run out of power.
Finding the turning point in a Forex pair when direction begins to change and sustain movement in an opposite direction is a dangerous endeavor. Timing the market has been known to make many traders lose their money, instead of simply pursuing a trend that is known. The movement downward in the EUR/USD has been strong, even if it has been believed overdone. Support near the 1.07500 to 1.07300 marks should be watched this week, if they do not hold this would be a bad sign possibly for the EUR/USD and mean another leg down could be demonstrated.
Without any major economic data coming this week, the EUR/USD will have to rely upon existing sentiment. If calmer conditions develop in the broad markets, perhaps the EUR/USD could start to climb again like it tried to early last week. The EUR/USD reflects the amount of nervousness in the broad global markets quite well. Some traders may rightly believe the currency pair has been sold too much, but knowing precisely when the trend will reverse higher and be sustained in the EUR/USD has proven difficult this summer.
GBP/USD
The GBP/USD went into the weekend near the 1.25855 level and within sight of lows made earlier in the week around the 1.25600 ratio on Tuesday of last week. The GBP/USD did reach a high of nearly 1.27485 on Wednesday, and held its value higher on Thursday but started to stumble on Friday again. U.S. jobs data was published on Friday and actually came in what could be perceived as ‘favorably’ to create weaker USD price action, but that did not happen.
Behavioral sentiment seemingly remains high in the financial markets and the GBP/USD has been sold off in the wake. The choppy conditions seen last week however were expected, and trading in the coming days will likely provide more nervousness.
The GBP/USD is within sight of intriguing support levels and this may prove tempting for speculators with a taste for excitement. Not only did the GBP/USD close near its weekly low, but it is not much higher than its monthly low which took place on Friday the 25th of August when the currency pair challenged the 1.25500 level.
Speculative Wagers and Thoughts of the GBP/USD Being Oversold
Traders who want to wager on the GBP/USD being oversold should not get too aggressive quite yet. The nervous sentiment that has lingered in Forex and the broad financial markets since the second week of July is still shadowing. The GBP/USD remains above values seen in May and early June of this year, but support should be watched closely around the 1.25450 level.
Traders in the next couple of days need to remember tomorrow is a banking holiday in the U.S. and Forex markets will be relatively quiet. With major U.S financial houses gone for a long holiday, this could open the door for more nervous trading in the GBP/USD tomorrow, support levels will need to prove durable for bullish sentiment to build.
However, tomorrow’s trading may not look anything like the trading that develops on Tuesday. Speculators need to be prepared for the potential of additional volatility hitting in the middle of this week, particularly as financial institutions brace for what may be changing outlooks based on lackluster U.S data which has been seen the past couple of weeks.
Relatively Light Data this week so Traders will Rely upon Behavioral Sentiment
- As traders return from the long holiday weekend in the U.S., they will rely upon their perceptions regarding what is to come without major economic data coming from the UK or States this week.
- Support levels may prove important tomorrow because the GBP/USD is within sight of last week’s low. If the 1.25800 to 1.25750 levels can be maintained, this may be interpreted as a buying signal.
GBP/USD Weekly Outlook:
The speculative price range for GBP/USD is 1.24860 to 1.27340
Trading the past week in the GBP/USD certainly produced the nervous results that were expected. The range in the GBP/USD while testing highs in the middle of the week, stumbled again. Because of the U.S. banking holiday tomorrow, the GBP/USD may produce rather suspicious results again tomorrow. Volumes will certainly be lighter than normal tomorrow, but Tuesday’s trading could produce price velocity as financial institutions fully engage and pursue their positions.
While speculators may look at the GBP/USD and perceive that it has been vastly oversold, Forex conditions remain nervous and the USD has produced strength in a rather aggressive manner against many major currencies. Traders looking for upside price movement to develop should remain patient and not get overly ambitious regarding bets they make looking for upside.
USD/JPY
The US dollar has been all over the place against the Japanese yen, but the most prescient part of the week might’ve happened on Friday as we initially plunged, only to see buyers come in and start going along yet again. At this point, we break above the top of the candlestick, then it’s likely that we go to the ¥150 level. On the other hand, we break down below the bottom of the candlestick, then the ¥142.50 level is an area where we would see a lot of support. Buying on pullbacks to pick up value is the way to go going forward as the interest rate differential continues to favor this market.
EUR/GBP
The euro has gone back and forth during the course of the trading we, as we continue to hang around the 0.85 level as support. We have been going back and forth between the 0.85 level underneath and the 0.87 level above. In general, this is a market that shows that perhaps short-term traders will continue to take advantage of the overall consolidation area that is so clearly marked out on this chart.
NZD/USD
The New Zealand dollar initially tried to rally during the course of the week, but the 0.60 level continues to offer resistance. The area previously had been a major support level, and of course is a large, round, psychologically significant figure. If we break down below not only this candlestick but the one before it, I believe that the New Zealand dollar will plunge toward the 0.57 level, possibly even the 0.55 level. On the other hand, if the market were to break above the top of the week, it’s possible that we could look into the 0.62 level.
USD/CHF
The US dollar initially pulled back during the course of the week, only to turn around and show signs of life. We are now threatening the top of the big wipeout candlestick, and it looks like we could go higher over the longer term, at this point, I think short-term pullbacks continue to offer buying opportunities. After all, the 0.8650 level has been a major support level over the longer-term monthly charts. If we break above the 0.89 level, then it’s possible that we could go looking to the 0.90 level which of course is a large, round, psychologically significant figure. If and when we break above there, then it’s likely that the dollar will crush the Swiss franc.
GBP/CHF
The British pound has gone back and forth during the course of the trading week against the Swiss franc, as we continue to see the 1.10 level offer a massive support level. At this point, I think we probably continue to see a lot of short-term back-and-forth, and I do think that we have to look at this through the prism of trying to figure out where we are going next. If we break down below the 1.10 level, then it’s likely that we could plunge toward the 1.05 level.
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