After climbing to around the 1.05300 level early on Monday of last week, the EUR/USD began to see buyer remorse hit the currency pair. As the Federal Reserve announced it would remain cautious on Wednesday of last week the EUR/USD did touch the 1.03800 vicinity. 
When the ECB lowered its interest rate as expected on Thursday the EUR/USD climbed momentarily because an anticipated action was proven correct and touched the 1.04700 ratio momentarily. Then reality once again began to cast a shadow over financial institutions.Behavioral sentiment remains fragile regarding the EUR and other major currencies paired against the USD. The fact that the European Central Bank said they will now take a cautious approach to interest rate policy on Thursday after cutting their Main Refinancing Rate did not create positive sentiment for traders – the EUR did not make friends. What it showed financial institutions who are nervous and upset about weak European Union economic conditions, is that the ECB will try to dance in step with the U.S Fed and this caused a selling backlash of the EUR/USD.
1.04000 Level Falters and Nervous Sentiment
The U.S will release jobs numbers this coming Friday, but the fact that financial institutions continue to have a negative outlook regarding E.U economic data and the notion that the ECB doesn’t believe it has to cut interest rates further is causing headwinds for the EUR/USD. Technical traders should watch the 1.04000 level as a barometer, the ability to fall below this level and go into this weekend well below the ratio is not a good sign.The EUR/USD was trading at lows that consistently tested the 1.03000 level in the second and third week of January. Closing at the week’s low this Friday and news about tariffs about to be introduced to Canada, Mexico and China will not make Forex traders feel more comfortable. The EUR/USD may not feel like it should be hit by tariff news in the minds of traders, but behavioral sentiment in Forex may continue to make USD centric strength based on risk adverse conditions remain active.
Last Week’s Jump Higher and Speculation
Early trading last week in the EUR/USD showed that may financial institutions believe the currency pair was in oversold territory, early buying and the ability to challenge the 1.05000 level was important. However, bullish bets on the EUR/USD quickly vanished as concerns about the Federal Reserve and European Central Bank clearly showed central banks remain cautious about their outlooks too.
EUR/USD Weekly Outlook:
Speculative price range for EUR/USD is 1.02700 to 1.04300The ability to go into this weekend at its lows for the week is a reason for concern regarding the EUR/USD. While bullish traders may believe the currency pair is oversold, betting when the turnaround higher is going to unfold and become sustained is still a gamble. Traders buying the EUR/USD early last week were likely happy to see the 1.05000 level penetrated higher, but it quickly vanished. Trading tomorrow and Tuesday will be affected by behavioral sentiment in a major way and volatility should be anticipated.If trading in the EUR/USD sees sustained value below the 1.03700 level this could be a bearish signal. Until the 1.04000 level is penetrated higher, financial institutions will likely remain cautious regarding any attempts to get too far ahead with betting on a stronger EUR for their cash forward commercial positions. If news regarding the tariffs gets louder late today and early tomorrow, the EUR/USD may turn reactive and test lower depths near-term.
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