Perceptions matter in the Forex market. Sentiment continues to be cautious in the broad markets and the EUR/USD currency pair has followed the prevailing cautious attitudes. What would have certainly been perceived as a stark lower realm in the second week of September is now becoming a steady testing ground the past handful of days. Traders who have pro-EUR tendencies should continue to make sure their biases are not interfering with the existing conditions in the broad Forex market and headwinds which are creating sentiment towards USD centric strength.
EUR/USD Finds Little Relief from Cautious Market Sentiment
Traders who have been awaiting a big reversal upwards after the stark selloff of the EUR/USD seen last Monday may have been able to take advantage of some reactive buying, but technically the currency pair continues to get pushed back to its ultra-cautious stance. While financial institutions may firmly believe the EUR/USD is in oversold territory, the near-term is likely to remain a rather difficult battle ground.
The mid-term timeframes that some may be holding out hope for are likely correct, but stepping into the current cautious storms and looking for an extended upwards trend could prove costly, particularly if more risk averse impetus occurs. The EUR/USD is certainly within the lower part of its mid-term technical realm, but historically lower values have been seen and retail speculators need to remain mindful of this dynamic.
Oversold Conditions Do Not Yet Resolve the Near-Term Risk
The EUR/USD has been able to climb back above the 1.12000 mark, but this should not create any victory parades quite yet. Sustained buying has not proven an effective method for most traders quite yet due to the amount of intraday volatility that remains abundant. The EUR/USD has not shown the ferocious price action that pervaded the currency pair early last week the past could of days – and that is a good thing in most respects.
The velocity of the EUR/USD early last week proved significantly dangerous for larger players just as much as it did for those tinkering with small wagers. The EUR/USD should be watched for attempts to touch the 1.12100 in the coming hours, this as it lingers near the 1.12990 vicinity. Technical boundaries in the EUR/USD like in most assets are programmed by codes that look for numbers that are considered easy to define and this particular level is certainly with sight and will provide a testing ground for sentiment today.
The 1.1200 Area Tests Whether Buyers Can Hold Ground
Looking for sustained momentum in the EUR/USD to be demonstrated will likely prove difficult in the short and near-term. Too many variables remain within current market sentiment. Yes, the EUR/USD may be viewed as still being in oversold territory, but the European and U.S bond yield crises have not disappeared and will remain a talking point.
Nervous conditions in the equity indices and drama still being seen in the Middle East are also casting shadows on financial institutions. The EUR/USD is not going to escape these shadows easily in the coming days. Thus, choppy conditions should be anticipated by retail speculators who are hoping to see a new trend suddenly emerge. The EUR/USD could easily find itself testing support ratios again in the coming hours and find 1.12000 and below part of the vocabulary again.
EUR/USD Price Chart – Support and Resistance Areas
A Move Lower Would Challenge Reversal Expectations
The EUR/USD offers the opportunity to test short and near-term perceptions for retail traders, but unfortunately the broad Forex market remains within a dangerous testing ground. USD centric strength may find it is difficult to continue easily, but the existing price realm might find that it becomes an unfriendly trial for those who are determined to point to results that indicate a solid reversal is about to occur. The EUR/USD could actually proceed to lower realms near-term. Traders may not like the feeling that they have to be reactive, but trying to bet ahead of the curve in the current conditions could prove costly.
EUR/USD Enters the Week with Sentiment Still Unsettled
As the week’s trading gets ready to settle in, the past couple of weeks should be kept in mind. The EUR/USD has suffered a serious downturn, but the past week of trading has produced a realm in which support and resistance have become a testing ground as caution has turned into a stubborn sentiment that appears unlikely to suddenly disappear quite yet – meaning trading will remain challenging.
EUR/USD Levels to Watch as 1.1200 Faces Another Test
EUR/USD is holding close to 1.1200, but the recovery has not yet established a clear shift in sentiment. The nearby 1.12095 area is the first sign that buyers are gaining traction; a sustained move above it could bring 1.12145 into focus.
On the downside, 1.12040 is the immediate level that needs to hold. A failure there would leave 1.11870 as the next area where the market’s appetite for dollar exposure may be tested. With cautious sentiment still dominant, price behaviour around these levels may matter more than a brief move through either one.
Key EUR/USD levels
Immediate resistance: 1.12095
Higher resistance: 1.12145
Immediate support: 1.12040
Lower support: 1.11870
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