EUR/USD Forecast – Euro Continues to Fall

EUR/USD Forecast Video for 15.05.23

Euro vs US Dollar Technical Analysis

The euro initially tried to rally a bit during the trading session on Friday but gave back gains rather quickly. By doing so, the market has pierced the 1.09 level and the 50-Day EMA indicator. This, of course, is a negative sign, but whether or not it is the beginning of the end of the uptrend in the euro is still an open question.

Quite frankly, it’s difficult to imagine how much longer the euro can rally against the US dollar, and I think we may be seeing the beginning of a significant pullback. However, that does not necessarily mean that the pair will sell off drastically, rather it could be more or less a gradual and grinding pullback. Keep in mind that the 200-Day EMA is near the 1.07 level and will probably attract a certain amount of support if we get down to that region. Furthermore, there seems to be an attempt by the market to stand up to the Federal Reserve, as the Federal Reserve continues to suggest that they are going to remain tight for longer, while the market does not seem to believe it. In other words, we are playing a huge game of “chicken” at the moment, so it will be interesting to see how this plays out.

Ultimately, this pair will continue to be very noisy, and although we’ve hit a bit of a brick wall on the upside, it doesn’t necessarily mean that the trend is over. We are probably in flux as we try to sort out the interest rate differentials for both central banks. The biggest problem, of course, is that both of them are hawkish, so traders are not really sure which one to go with. Because of this, you will need to be very cautious with your position size and, of course, ensure that you have stop losses put in place as the choppiness could get out of control.

All things being equal, this pullback is probably healthy for the bullish market, assuming that we will eventually turn things back around. After all, you cannot go straight up in the air forever, and it’s probably worth noting that it’s been very gentle on the way back down, with the worst candlestick being the Thursday candlestick, which quite frankly wasn’t all that horrible.

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