After another surge higher early this week on Tuesday and a move above the 1.18030 vicinity, the EUR/USD began to seeing selling emerge. By Wednesday of this week, before central bank announcements from the BoE and ECB on Thursday, which delivered anticipated news, the EUR/USD sank to nearly 1.17030. And then on Friday the EUR/USD again touched the 1.17030 area once again.
But now the holiday season is getting ready to unfold, and broad Forex volumes will become very quiet tomorrow and on Tuesday. And by Christmas eve traders need to understand even the EUR/USD will see limited movement per the shuttered global financial system during the holiday.
The 1.17100 has seen some sustained trading below its sphere and price action may look to this mark as a barometer regarding outlook for the EUR/USD near-term. However, traders should be careful to not fall into a trap and decide short-term trading conditions match mid-term outlooks in the coming two weeks. Yes, equilibrium per market values in the EUR/USD will be expressed in the day to day results seen, but as large players sit on the sidelines speculators should make sure they do not get flustered if surges occur without any real explanation.
Perhaps early this coming week nervous sentiment should be considered a risk in the broad markets, but U.S equities via the major indices did find stability on Friday before going into the weekend. Light volumes in the coming days and weeks will cause instability, but results must be questioned. If U.S markets remain stable going into Christmas perhaps this could spark a reversal upwards for the EUR/USD.
Some technical traders may point to the test of lows on Wednesday and Friday of this past week as a dangerous signal for the EUR/USD.
- A possible correction lower in what may be considered an overbought market is always a thought, but the move lower may have also taken place because nervous behavioral sentiment existed and will vanish.
- With the holiday season about to start, two full weeks of light trading are looking at speculators in the face, the chance that last week’s price action was merely a ‘false flag’ should also be considered.
Speculative price range for EUR/USD is 1.16850 to 1.17700
Trading conditions in the coming days should be looked at suspiciously. Certainly financial institutions will be active throughout Wednesday of this week, but volumes will be definitely lower than normal trading days. The EUR/USD has done a solid job of gaining the past month. The EUR/USD at its current values still remains within a healthy realm. The 1.17100 may be used as a signal early this week, if buying breaks above this level and is maintained on Monday it may demonstrate another shift in sentiment that suggests upside price action will develop for the EUR/USD.
If a move below the 1.17000 mark takes place on Monday and sees the level become durable resistance, it could mean some financial institutions have positioned themselves cautiously ahead of the holiday season which is notorious for producing results that don’t always correlate with mid-term outlooks. Day traders should be careful early this week if they decide to participate in the EUR/USD and the broad Forex market because choppy conditions will be a factor. After Tuesday of this week, the EUR/USD may be best left alone unless a trader feels the need to speculate within very quiet markets.
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