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The EUR/USD currency pair finished Friday’s trading near the 1.07108 level, essentially putting the pair within the middle of its one-week price range. This price action came as financial institutions brace for the days ahead.

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• The election results in France, which will be seen late tonight and into Monday morning, will likely impact the EUR/USD pair.
• The currency pair finished last week’s trading near the 1.07108 mark, which may be seen as a solid result considering the EUR/USD cross was trading below the important 1.07000 ratio for a large amount of time from Tuesday until Friday, with rather dynamic fluctuations taking place.

While it may be important to say the election in France has been braced for and traded into the EUR/USD pair already, day traders need to understand the daily intraday volatility, which will certainly be seen on early Monday, is expected to be dynamic. Importantly, the results of the first round of voting, which will be seen by financial institutions, will be used as an early warning sign regarding what to expect from the election results on July 7.

EUR/USD: Equilibrium as Nervous Tensions are Seen

However, day traders should also know financial institutions may have already sold off the EUR/USD pair as a preemptive move the past two weeks. The price action of the currency pair this past week was actually rather calm in some degrees and showed some optimism, and support, which has been seen since June 14, did hold back lower depths.

Thus, the question regarding equilibrium should be considered. It appears that support near the 1.06700 depth is considered a rather strong barrier. As for resistance, the higher level does appear to be the 1.07500 mark for the moment.

Day traders should not be aiming for the 1.06700 or the 1.07500 figures. They need to be much more cautious, particularly if they are using leverage. The results of the French vote will be important, but financial institutions also know the European Union doesn’t solely move according to internal French politics.

The reaction from financial institutions should be anticipated as potentially volatile, but unless there is a spectacularly surprising outcome, the EUR/USD pair may react within the known range seen over the past two weeks of trading.

US Holiday and Light Forex Volumes to End this Week

The US Fourth of July holiday will be celebrated on Thursday, which will effectively shutter financial institutions in the States from the middle of this week into July 8. The lack of volume from the US will also create a vacuum of sorts for the EUR/USD pair.

However, because of the French election, traders will have three days to react to the outcome before US institutions disappear. Thus, the EUR/USD cross may see fast conditions early this week, with relatively calm waters after Wednesday.

• Economic data this week will take a back seat to the behavioral sentiment shifts caused by the results of the French election.
• Again, the results in the EUR/USD pair may have already been bet on by financial institutions, which will simply react to the voting outcome as they pursue their mid-term outlooks.

EUR/USD Weekly Outlook: Speculative Price Range for EUR/USD is 1.06675 to 1.07710

While the EUR/USD does appear to be oversold by many speculators, short-term conditions for speculators should be treated with caution. Traders should not get overly ambitious. The pursuit of quick-hitting trades may be very tempting early tomorrow, but speculators will have to be on the lookout for fast reversals.

The knowledge that another round of voting will be seen on July 7 needs to be understood, and this could actually create cautious trading tomorrow if the results still do not point to the ultimate outcome regarding political control in France. The known range in the EUR/USD currency pair will be tested, and traders should be on the lookout for momentum -- particularly if key support or resistance levels are challenged early on Monday.

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