EUR/USD Forecast – Euro Continues to Bounce Around

Christopher Lewis
Published: Jan 5, 2024, 14:36 GMT+00:00

The euro fell a bit during early trading hours on Friday as the jobs report in the United States came out hotter than anticipated. That being said, it wasn’t a huge beat, so I don’t know if it makes a big difference in the longer term.

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EUR/USD Forecast Video for 08-01-2024

Euro vs US Dollar Technical Analysis

The euro fell a bit during the trading session on Friday as the jobs number came out a little hotter than anticipated. That being said, this is a situation where we are going to be threatening the 50 day EMA, and I would believe that sooner or later the Wall Street traders will do everything they can to convince themselves that the Federal Reserve is still riding to the rescue in order to save their stock portfolios.

How do they do that? Well, it’s quite simple. They keep interest rates low. And I do think that’s what a lot of traders are going to be banking on because of this. I think by the end of the day, we will have achieved very little. And furthermore, you have to keep in mind that there is the very real possibility that perhaps traders will focus more on next week when we get a little bit more data, and of course when there’s quite a bit more in the way of liquidity. After all, a lot of traders are probably still at home, not quite at the office yet. So we’ll have to wait and see how that plays out. Either way, I do think that this does set up a buy on the dip opportunity eventually when that plays out.

I’m not exactly sure at this moment, but I do think that the 50 day EMA is worth paying attention to and then the bottom of the overall uptrend, I believe, is somewhere closer to the 1.0750 level. Anything below there would be very bearish. Keep in mind that the Federal Reserve has moved the dots on the dot plot and has blinked.

So, we already know that the Fed is more likely than not to be cutting rates this year, and that comes into the psyche in general. With this being said, I think the US dollar will only gain from a longer standpoint if we see some type of major concern from an economic situation, or if the ECB finally admits that it will have to cut rates.

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

About the Author

Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.

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