EUR/USD Forecast – Euro Attempts to Break Higher Again

EUR/USD Forecast Video for 27-12-2023

Euro vs US Dollar Technical Analysis

The euro rallied a bit during the early hours on Tuesday, as we continue to see upward momentum in general. At this point, it looks like the 1.10 level is an area of intense action as you would anticipate, especially with the fact that we had gotten here so quickly but did see a very choppy session on Friday to signify just how noisy the market had been. At this point, I think we are trying to determine whether or not the interest rate situation will move in favor of the euro, as the US has seen precipitous declines in the 10 year yield.

Ultimately, this is a market that I think eventually tries to break out, and on a clearance of the Friday candlestick I think we probably start to see the euro move toward the 1.1250 level, which is an area that we see a lot of selling pressure at previously. With that in mind, I suspect it is probably only a matter of time before traders will feel the need to test that important level.

Looking at the market, it appears that the market has gotten a little overstretched, so I do think that we have to put in some work in this general vicinity before we continue going higher, or at the very least have to try and work off some of the froth by going sideways. All things being equal, this is a situation where I have no interest in shorting the pair, at least not until we break down below the 1.0850 level. At that point, then possibly we could go down to the 1.0750 level underneath.

Pay close attention to the US dollar, because if the US dollar starts falling against everything else, then the euro is a winner by default. In that environment, as money flows away from the US dollar, and then heads to the “anti-US dollar”, which is exactly what the euro is. On the other hand, if we do see the USD will start to strengthen elsewhere, then it obviously will show up in this pair as well.

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