EUR/USD Forecast – Euro Attempts to Stabilize

EUR/USD Forecast Video for 04.10.23

Euro vs US Dollar Technical Analysis

The euro has stabilized a bit during early hours on Monday, as the selling pressure seems to be abating a bit. With this in mind, it looks like the market is trying to sort out whether or not the 1.05 level will now offer resistance, and perhaps more importantly, the market will stay below it. This was a major area of support previously, and it does suggest that perhaps we have much further to go to the downside, but only time will tell. With that being the case, it’s very likely that we will see a lot of noise along the way, but at the end of the day it’s probably worth noting that interest-rate differential in the bond markets will probably be the main driver.

Keep in mind that the European Union is almost certainly going to head into a major recession, and this of course does not bode well for the currency itself. Beyond that, there are a lot of traders out there worried about the global economy overall, and this of course has an influence on this pair as well, as traders will typically run toward the US dollar in times of uncertainty.

We recently had the death cross, which is when the 50-Day EMA breaks below the 200-Day EMA, a long-term selling signal. Whether or not it holds remains to be seen, but it certainly could suggest that we have a lot of ugliness ahead of us. With that being the case, it still looks like a market that you will probably be selling on short-term rallies that show signs of exhaustion going forward. I do not have any interest in buying the euro at this point, but if we were to break above the 1.07 level, I might be convinced to have a go at it.

The size of the candlestick on Monday certainly suggests that we will get some follow-through to the downside, but we have been selling rather relentlessly for a while, so one would have to assume that sooner or later there might be an attempt to bounce for something more significant. Because of this, prudent money management will be your best friend.

For a look at all of today’s economic events, check out our economic calendar.