#EURUSD & #GBPUSD: Weekly Forecast (9-15 July 2023)

EUR/USD:

The EUR/USD enjoyed rather stellar gains for speculative bulls that may have been pursuing upwards momentum as the week finished with highs.

The EUR/USD has gone into the weekend near the 1.09680 ratio, which is within sight of the high made only a few hours before the Forex markets closed. While it would be easy to say the EUR/USD went up this week as predicted, based on the notion it was felt the currency pair had been oversold the prior week, this could also be foolhardy too. The big fact in Forex for traders is, including the EUR/USD, that luck plays a role in price movement while speculating for day traders.

The EUR/USD essentially was trading near the 1.08750 before the U.S jobs numbers were released on Friday. While the Non-Farm Employment Change figures came in weaker than anticipated and might lead some analysts to claim the higher move in the EUR/USD happened because of this result, the fact is the Average Hourly Earnings from the States came in stronger than anticipated. The higher inflation number could have easily caused a selloff of the EUR/USD, but it didn’t.

Smart Money Likely Moved Ahead of the U.S Jobs Announcements

The market facts are hard to know regarding why the EUR/USD climbed after the stronger than expected inflation numbers in the U.S, except to say perhaps financial institutions had braced for this potential outcome. Meaning it is possible that the EUR/USD climbed after the U.S data because folks were already anticipating the results. Inflation has been stubborn in the U.S, and some people have been talking about higher interest rates from the Federal Reserve for the past couple of weeks.

However, technical traders may laugh at this and simply say, the EUR/USD had been oversold recently and the movement upwards was a reaction to this dynamic. Day traders who want to understand the reasons why the EUR/USD moved higher on Friday with force will be hard pressed to find answers, but there is one important fact – the EUR/USD did move higher. And the strong finish above the 1.0900 level puts it within sight of June values which challenged ratios significantly above current prices.

Cautious Attitude for Speculators is recommended in the Days Ahead

• Important U.S. inflation data will come this Wednesday and Thursday from the U.S via the Consumer Price Index and Produce Price Index readings.
• The better-than-expected U.S. data recently makes a Federal Funds Rate increase on the 26th of July more likely, but perhaps financial institutions think the European Central Bank will have to be more aggressive than the Fed.
• The 1.09500 level early on Monday could prove to be an interesting barometer for the EUR/USD.

EUR/USD Weekly Outlook:

Speculative price range for EUR/USD is 1.08925 to 1.10175

Traders who were betting on upside momentum in the EUR/USD to occur last week may have been rewarded this past Friday. However, trading conditions prior to Friday’s results were choppy and may have been difficult for speculators not using appropriate risk management. The highs the EUR/USD made going into the weekend were intriguing, and Monday’s opening should be watched. If support near the 1.09500 can be sustained this would be significant and show the EUR/USD may have found some stable buying momentum, but traders should remember June values after testing highs reversed lower.

The inflation data from the U.S this week will prove challenging for speculators. Inflation is expected to remain stubborn, so an interest rate hike in the later part of July has likely been priced into the EUR/USD. Unless inflation comes in remarkably higher than anticipated, the EUR/USD could see rather tranquil results. If values for the currency pair remain above the 1.09000 level comfortably, speculators may start dreaming about the 1.10000 mark once again in the EUR/USD. However, before overly ambitious bets are made on upwards momentum, traders need to consider last week’s results in the EUR/USD are not exactly clear as to why they happened. Meaning choppy conditions may be seen this week. Risk management should be practiced by traders to guard against volatility.

GBP/USD:

Many financial institutions have come to accept the notion the U.S. Fed will have to increase its interest rates later this month, but they also suspect the Bank of England will have to be potentially more aggressive.

The GBP/USD jumped solidly upwards as the week finished, suddenly penetrating resistance and coming with sight of the 1.28500 ratio.

The GBP/USD raced towards its monthly highs as Thursday and Friday finished the week of trading with a flourish upwards for the currency pair. Speculators who have been aiming for higher values saw the 1.28000 begin to emerge as a target on Thursday, and then on Friday see the resistance level get brushed to the side. The GBP/USD went into this weekend with a ratio of around 1.28375.

The move higher in the GBP/USD is remarkable and shows how financial institutions look at future prospects. While inflation data from the U.K. remains high and mortgage prices in Britain are problematic, the GBP/USD has marched merrily upwards recently. The high around 1.28500 was challenged in the middle of June also, but the last time the GBP/USD was above this juncture was in early April of 2022. The move higher in the GBP/USD may be surprising to even the most bullish amongst its speculators.

U.S Inflation Data was Strong and Important U.K Statistics are on the Schedule

U.S. Average Hourly Earnings on Friday came in higher than anticipated. This likely gave many financial institutions reasons to suspect the U.S Federal Reserve will have to raise interest rates again in late July. But the upwards momentum of the GBP/USD shows that traders are likely betting the Bank of England may have to remain more aggressive than the U.S Federal Reserve.

Traders cannot count on one-way avenues upwards, and even this past Friday a reversal lower was demonstrated which took the GBP/USD to a mark of nearly 1.27250 before it incrementally started to show a robust surge again. Economic data from the U.K. this week will include Claimant Count Change and wage numbers. BoE Governor Bailey will also be speaking a few times this week.

The 1.285000 and Beyond are Speculative Targets

• Before traders bet blindly on upwards movement from the GBP/USD they should know important inflation data will come from the U.K and U.S this week.
• After making highs in the middle of June similar to the values now being seen, the GBP/USD fell to a low around 1.25900 on the 29th of June. This should serve as a caution sign for speculators who attempt to wager without enough risk management.

GBP/USD Weekly Outlook:

The speculative price range for GBP/USD is 1.27600 to 1.28900

Yes, it is true the GBP/USD has gone up and speculators betting on the momentum higher likely had a rather good week that is if the reversals lower beforehand didn’t knock them out of the game before the GBP/USD recovered. However, one week of solid results does not mean the same expectations can be expected in the days to come. Traders should remain cautious because plenty of economic data this week which could cause volatility. CPI and PPI data from the U.S. will come on Wednesday and Thursday. If the GBP/USD should start to move lower and fall through the 1.28000 mark, support near the 1.27900 to 1.27800 could prove worthwhile to watch. If these levels hold it could signal additional movement upwards could be speculated on.

Many financial institutions have come to accept the notion the U.S. Fed will have to increase its interest rates later this month, but they also suspect the Bank of England will have to be potentially more aggressive. If the GBP/USD rises above the 1.28500 mark and begins to show an ability to keep above this height, speculators may start to believe the 1.29000 realm is a legitimate target. But day traders should stay realistic and not wager on targets that are too far away while using too much leverage. The market forecast could prove right eventually, but if volatility knocks a trader out of the GBP/USD on small reversals lower, any upside movement would then be worthless to a speculator without the funds to bet. Cashing out winners is a solid tactic instead of wishing on castles built in the air which may never be seen.

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