EUR/USD day traders will have to make some interesting decisions ahead this week concerning speculative positions, as the currency pair continues to hover within sight of important mid-term lows.

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The EUR/USD currency pair went into the weekend near the 1.08725 ratio as it created a one-month low and found its value floating near what could be considered crucial mid-term support. Having touched a high around the 1.12775 mark on July 18, most bullish speculators of the EUR/USD pair have likely found its downward trajectory during the past month to be painful.

Recently, risk-averse sentiment has caused the US dollar to become stronger, even as many financial institutions believe the US Federal Reserve will have to become less aggressive moving forward.

While some traders will certainly point to Friday’s core Consumer Price Index reading from the EU as a culprit regarding the lower trend of the EUR/USD pair, it should be remembered that the numbers actually came in as forecasted.

Economic data from Europe this coming week will see Manufacturing Purchasing Managers Index readings on Wednesday and German Business Climate data this coming Friday. However, it is likely that market action in the US will continue to spur the EUR/USD currency pair in a particular direction.

Downwards Momentum Consistent in the EUR/USD Pair Over the Past Month

On Monday of last week, the EUR/USD pair fell below the 1.09000 ratio, and then it struggled to fight its way above this mark for the next couple of days. A high of around 1.09510 was seen briefly on Tuesday, but the EUR/USD pair then began to march lower.

After falling through the 1.09000 ratio again on Wednesday, the currency pair was only able to climb above this mark for a little more than two hours on Thursday. Before going into this weekend, the EUR/USD currency pair displayed negative selling momentum as support levels came into full view while testing mid-term lows.

The last time the EUR/USD pair was near its current value was on the July 7. Before reaching this level, the week before on May 31, the EUR/USD currency pair had sunk to a low of nearly 1.06300, which it hadn’t seen since the middle of March.

Speculators who are convinced the EUR/USD pair is now oversold may be proven correct eventually, but the currency pair has traded lower in the mid-term. Global risk sentiment has to be watched intently, and traders can do that by watching the U.S Treasury yields.

If the U.S Treasury yields start to move lower this week, such a move could mean risk appetite is increasing a bit and the EUR/USD pair may spark higher -- but that is a big ‘if’ within current market conditions.

Volatility and Choppy Conditions Likely to Continue for the EUR/USD Pair This Week

• The 1.09000 level this week will now serve as a target for bullish speculators. If this level can be penetrated higher and sustained, this could be a near-term bullish signal.
• If support levels near the 1.08500 come under attack and then prove vulnerable, this could ignite more selling and a test of the 1.08400 to 1.08300 zone rather quickly.
• Bullish traders who are convinced the EUR/USD pair is oversold and are looking for a bottom to ignite their buying positions should remain cautious in the near-term.

EUR/USD Weekly Outlook

The speculative price range for the EUR/USD currency pair is 1.08175 to 1.09650

Price velocity downwards has not been particularly violent in the EUR/USD pair, but it has been instead rather steady. The notion that there may be one more push downwards in the EUR/USD pair may make sense, and under the present nervous conditions, traders should not discount the amount of fundamental sentiment which is forcing the pair to test mid-term lows.

Yes, the EUR/USD pair does look oversold at its current values, but timing a sustained move higher is a guessing game -- particularly when financial institutions continue to show nervous sentiment.

The Jackson Hole Symposium in the US will take place later this coming week, as global central bankers meet to discuss policy they will certainly make their viewpoints known. But, we know what they are essentially going to say. They will say they remain concerned about inflation and limited growth. Traders need to be cautious this week and use solid risk-taking tactics in the EUR/USD currency pair.

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