EUR/USD Weekly Forecast 20/04: Higher Values (Chart)

(MENAFN- Daily Forex)

• The European Central Bank cut its Main Refinancing Rate to 2.40% on Thursday of last week, this just before the long holiday started to take effect and traders began vacating their offices. Did anyone notice?
• The EUR/USD did not move violently on the interest rate cut from the ECB, this because financial institutions expected the move, and because their attention was elsewhere.
• The EUR/USD touched an early high last week of nearly 1.14260 on Monday before giving back some value, the low for the week was made Tuesday around the 1.12660 mark. But this low sparked consistent buying again on Wednesday and the 1.14100 was penetrated once more.
• The price of the EUR/USD has maintained value above 1.12000 since Friday the 11th of April.

Upwards Drive and Shift in Behavioral Sentiment

On the 1st of April the EUR/USD was below the 1.08000 level. The change in stronger sentiment in the EUR/USD and other major currencies like the GBP and JPY are plain to see in Forex. USD centric weakness has taken hold, and even many emerging market currencies are showing strength against the USD. The U.S tariff policies have caused financial institutions to question their outlooks for the mid and long-term.

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The EUR/USD is traversing territory that its had last seen in February of 2022, but those values over three years ago occurred when a bearish move was being seen in the currency pair. The EUR/USD was near the 1.22000 level in early 2021. Before day traders get overly ambitious about loftier targets in the EUR/USD, they should consider the current economic landscape and acknowledge many questions remain unanswered/USD as Central Bank Contradictions Build

While the ECB has been busy cutting interest rates in order to fight recession in Europe, the U.S Federal Reserve has acted very cautiously (indecisively). This past week Jerome Powell said he is not going to rush into interest rate cuts as long as there are questions about the affects of tariffs on the U.S economy.

• The Fed has expressed concern about the potential of inflation being caused by tariffs and the potential of a slowing U.S economy.
• This outlook offered by Fed Chairman Powell caused a loud reaction from President Trump who said Powell needs to be replaced.
• However, Trump does not have the ability to get rid of Jerome Powell easily, for the moment they are stuck with each other.
• The Fed may be moved to cut interest rates in June, particularly if the U.S stock market continues to struggle, but the Fed to no one's surprise is staying outwardly cautious.
• Forex markets will remain volatile in the coming weeks, but USD weakness has been evident.
• In the coming days resistance levels may be challenged again by the EUR/USD, but a general lack of clarity for financial institutions remains dangerous for all.

EUR/USD Weekly Outlook:Speculative price range for EUR/USD is 1.13100 to 1.14900

Day traders may feel the ability to wager on EUR/USD upside is a solid bet. However, following the long holiday weekend means short-term speculators should watch the return of large players carefully early this week. Trading volumes may remain low on Monday in Forex because many institutions will be lightly staffed until Tuesday. Sideways price action this past Thursday in the wake of the ECB interest rate cut may indicate many believe the price realm of the EUR/USD has reached equilibrium. However technical traders should not get fooled by the dose of calm seen late last week, volumes were light.

There will be plenty of reactions to the tariff rhetoric which will certainly swirl from the U.S White House early this week and counterparts in Europe. As a barometer, day traders should watch U.S Treasury yields on long-term bonds. If yields remain elevated in U.S bonds, this may indicate the USD could remain weaker under the present conditions as tariff negotiations are discussed publicly. The broad Forex market is likely to remain fast and day traders of the EUR/USD need constant risk management tools to be used.

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EURUSD Chart by TradingView

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