Going into the Christmas weekend, the EUR/USD exchange rate is close to 1.10140. The pair hit highs near the 1.10400 level early on Friday, a value last seen on August 10. EUR/USD is now trading close to medium-term highs again, and this time bullish speculators may be more confident about the pair’s chances of sustaining the current price zone and heading higher.
After rising from a low of nearly 1.05175 in early November, EUR/USD reversed lower again after hitting the 1.10100 level at the end of November. But after hitting near 1.07360 on December 7, EUR/USD started to climb upward again. The Fed‘s comments in mid-December shifted from neutral to dovish, helping EUR/USD rise. However, the EURUSD turned lower again last Wednesday and was challenged by the 1.09300 mark. However, this low is a clear indication that higher values are continuing. Then, further momentum arrived for traders who were still in their trading positions and remaining bullish ahead of the long holiday weekend.
US economic data supports EUR/USD gains
U.S. gross domestic product data released late last week were weaker than expected, but growth figures remained relatively strong, a result that reignited concerns about a slowdown in the U.S. economy. On top of this, U.S. inflation data came in weaker than expected, reinforcing the belief that the Fed will have to turn dovish in spring 2024. Weaker-than-expected inflation data from the United States helped EUR/USD gain ground.
EUR/USD’s ability to climb above the 1.10000 level this weekend and sustain the price is one to watch. EUR/USD briefly touched the 1.10000 mark on Thursday last week, but rose on Friday and the price action continued into the weekend, with the potential for significant moves ahead despite lower FX volumes. The Christmas long weekend will impact trading volumes this week. With markets expected to be thin at the start of the week, traders need to understand that even for EUR/USD, lopsided conditions can be dangerous at times.
EUR/USD risk management and bullish sentiment
Bullish speculators have been waiting for EUR/USD to form an upward trajectory that could lead to further gains, and they may expect solid buying conditions to remain evident. The 1.10000 mark will be on the radar early this week, and if EUR/USD can sustain price action above this level and continue to flirt with higher values, this could set the stage for bullish bets to remain strong and build.
EUR/USD weekly outlook:
EUR/USD speculative price range is 1.09775 to 1.11910
Traders cannot be blamed for believing that more gains are coming in EUR/USD. However, speculators also need to understand that many financial institutions will be absent from the trading scene, opening the door for large players who need to move money in potentially unexpected ways. If EUR/USD is able to challenge last Friday’s highs and sustain above the 1.10400 and 1.10500 ratio, this could lead to other bullish speculators looking for higher value.
Traders should not be too ambitious this week. Yes, Forex sometimes moves in a dynamic way during the year-end holidays, but large swings cannot be relied upon. Traders should use pending orders to prevent unexpected trades when the market is light during holidays. If EUR/USD suffers a rapid correction (reversal), using take-profit orders to cash out profitable positions before they disappear could be crucial, as some large institutions keep a close eye on FX over the holidays.
