There is a growing concern in some financial institutions the European Central Bank may be forced to cut interest rates before the Federal Reserve. Meanwhile, US data continues to come in stronger than anticipated. GDP numbers and inflation statistics last week in the US continued to show a rather stubbornly strong economy; even Consumer Sentiment numbers were higher than anticipated.While the Fed has seemingly promised a few interest rate cuts in 2024, economic data is not helping its case. Additionally, doubts are being seen throughout global Forex as the US dollar has gotten stronger.
Holiday Trading and an Early Test of Sentiment
While the EUR/USD currency pair went into the weekend touching values seen in late February, the currency cross is also once again bouncing up against mid-December values before the US Federal Reserve made its official rhetoric softer.Choppy conditions have been stark in the EUR/USD pair since the middle of December, and a high of nearly 1.09835 was briefly seen on March 5. Yet, the overwhelming response to moves higher in the EUR/USD duo over the past few months and weeks have been reversals lower.More volatility will likely develop later this week in the EUR/USD currency pair. Trading volumes to start April will be light as financial institutions return from the Easter holiday, but this coming Friday will see crucial jobs data release in the US, and speculators will react.The Fed has been put into a position that seems to be wishing on weaker jobs numbers in order to talk about interest rate cuts. Jerome Powell said recently that even if inflation remains sticky in the mid-term, that weaker hiring could spur the US central bank into a rate cut. However, economic data from Europe has been weaker than US statistics, and this has created the notion the ECB could be forced into a position in which they are more dovish than the Federal Reserve.
The 1.08000 Ratio as a Barometer for the EUR/USD
Traders who are convinced the EUR/USD pair has been oversold should be careful. The 1.08000 ratio is likely important for behavioral sentiment. Unless the 1.0800 level is penetrated upwards and sustained, traders may believe selling power continues to remain dominant in the EUR/USD duo.
EUR/USD Outlook for April 2024: Speculative Price Range for EUR/USD is 1.07425 to 1.09150
The choppy trading conditions which have recently plagued Forex are likely to continue until clarity regarding central bank outlooks start to become better. Jobs numbers this Friday from the US will take on added significance and have an effect on the EUR/USD pair. Quick hitting trades should be done with proper risk management, and for traders holding positions before the jobs data, the use of stop loss and take profit orders will help.April may prove to be difficult for traders if US data continue to come in mixed. But if jobs numbers this coming Friday proves weaker than anticipated, this could lead to some bullish ignition in the EUR/USD pair based on the notion the Fed will have ammunition to pursue a rate cut in June.But if the EUR/USD currency pair were to fall below the 1.07600 level, this would be a bearish signal.More By This Author:USD/CAD Analysis: Incremental Higher Price Action and a Wider Range
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