Speculators chasing a bullish climb in EUR/USD may be scratching their heads in frustration this weekend. When the EUR/USD opens trading on Monday, the pair will be close to the 1.10175 ratio after hitting a high of 1.10925 on Wednesday before reversing lower on Thursday and Friday before heading into the weekend. The Fed helped push EUR/USD higher when it talked about a possible pause in interest rate hikes in the middle of the week.

However, not everything is clear about the outlook for central banks. The ECB did raise its main refinancing rate by 0.25% last Thursday, as expected. However, inflation in Europe and the United States remains challenging at best. This week will see the release of important consumer price index data in the US, and the result on Wednesday is sure to elicit a reaction from EUR/USD. Central banks continue to worry about inflation.

The higher EUR/USD is solid, but the shadow does not make it easy for traders to move up

The ability of EUR/USD to climb higher is strong, and the potential to hit the 1.11000 mark is definitely a target for some traders. However, the strong reversal that continued lower is a clear reminder that forex trading, even for a major forex pair like EUR/USD, is not easy and is actually quite complicated.

Financial institutions seemed to anticipate the Fed's rate comments and bought EUR/USD ahead of the FOMC announcement. But the U.S. central bank's concerns about the near-term outlook are still eliciting mixed reactions, and there could be a bumpy road ahead for speculators who just want to bet on a higher euro/dollar. The move from Wednesday's high near 1.10900 to Friday's low near 1.09660 is a powerful reminder of the need to always use risk management.

Eur/USD support looks durable, but is not guaranteed

Traders who remain bullish on EUR/USD should watch the US CPI data on Wednesday and remain cautious.

A stubborn inflation outcome or a higher-than-expected outcome could lead to a sell-off in EUR/USD if the rally leads to a major statistical surprise.

Comments from FOMC officials this week will also be worth watching, with hawkish comments causing volatility regarding their June rate outlook.

The price level of EUR/USD 1.10000 will have an important impact on behavioral sentiment at the beginning of the week.

Weekly outlook for EUR/USD:

The speculative price range for EUR/USD is 1.09410 to 1.11140

The fact that EUR/USD can continue to put pressure on the 1.11000 ratio is certainly interesting, but the pair's inability to break above this level is also a warning sign for day traders not to be overly optimistic or set too high a target. Volatility in EUR/USD remains fairly fast as higher price ranges remain in focus and financial institutions seem to be betting that the Fed may become more dovish by the end of the year.

However, the near-term outlook for the Fed remains a concern, with more cautious comments from Fed Chairman Jerome Powell last week. If EUR/USD falls below

The 1.10000 level and difficulty climbing above it can be interpreted as a short-term bearish signal. Challenges 1.09800 to 1.09700 will cause tension. Any move below 1.09600 to 1.09500 May look like too much selling.

Eur/USD is bound to move higher, especially if this week's US CPI data is weaker than expected. If U.S. inflation data by the middle of the week shows a decline, this could spur new buying momentum and challenge last week's highs and potentially retest the 1.11000 ratio.