(MENAFN- Daily Forex) The EUR/USD climbed from its lows on the 22nd of November which were testing long-term low water from late November 2022, the recent upwards shifts shows behavioral sentiment appears to have solidified but it will be tested quickly.
After trading below the 1.04000 level on Friday the 22nd on November, and then showing the ability to create durable support at slightly higher ratios early this past week, the EUR/USD began to incrementally climb on Wednesday and held its ground during the U.S holiday. The EUR/USD finished the week near the 1.05740 ratio and the 1.06000 level may have speculators dreaming about upwards momentum.
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Behavioral sentiment which has been nothing short of nervous since late September showed some signs of shifting last week, but it must be asked how much the absence of large U.S financial institutions played into the value of the EUR/USD Wednesday, Thursday and Friday? Volumes certainly started to shrink on Wednesday as large U.S traders began to escape for the major U.S holiday and long weekend. Will the U.S traders return spell more trouble?Early Trading in the EUR/USD This Coming Week
Opening prices for the EUR/USD need to be watched closely when the London session opens on Monday. If the EUR/USD can hold onto its slightly higher values, this may be a signal that additional buyers are lurking and may be acting on the notion they believe the currency pair has been oversold the past two months. However, the trend lower in the EUR/USD should be respected and a proper challenge of the 1.06000 level and ability to sustain this mark needs to be seen before many will be convinced that the worst of the bearish trend has been completed.
The U.S jobs numbers which will be published this coming Friday will be a solid barometer for the EUR/USD. The European Central Bank appears to be in a position to cut its Main Refinancing Rate on the 12th of December, but the ECB has a habit of being cautious and they might not want to be overly aggressive if they know the Fed is not going to match their moves. Meaning this Friday's U.S Non-Farm Employment Change numbers will be a lightning rod and cause fast reactions in the EUR/USD. If the jobs results are weaker than anticipated this could fuel buying of the EUR/USD. Until the employment results are produced, choppy trading and a speculative range are likely to be seen/USD Impetus via Data and the Trump Effect
The start of this week near the 1.05740 will be interesting. If the EUR/USD is able to maintain its higher stance this will indicate that financial institutions may believe the coming Trump economic policies have been digested into existing behavioral sentiment and that economic data will again start to be a focus.
The U.S has published rather mixed data the past couple of weeks which may allow for the Fed to remain dovish, but this week's jobs numbers will be the propellent for large players.
Traders have not been reacting to economic data too much since the U.S election.
Until then the 1.05300 to 1.06100 levels may prove to be a rather dynamic betting area/USD Weekly Outlook:Speculative price range for EUR/USD is 1.04975to 1.06320
Trading in the EUR/USD has seen a significant selloff the past two months. After looking as if the currency pair would comfortably trade above the 1.10000 ratio late September and into the fall, the nervous energy of Forex has seen the currency pair create a significant downturn. However, the lows generated on the 22nd of November and early last week may be considered a floor by many financial institutions.
This week's early trading will create a looking glass for retail traders who want to know where sentiment is lingering. Early selling this week would likely signal nervousness remains strong. But buying action and sustained highs near current levels and slightly above tomorrow and Tuesday would be a sign many larger players are anticipating more positive momentum to develop in the EUR/USD. The Non-Farm Employment Change numbers from the U.S will be a force in the currency pair, but this will only take place on Friday, until then traders should anticipate potential choppiness.
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