EUR/USD Forecast – Euro Continues to Find a Bid

EUR/USD Forecast Video for 16.11.23

Euro vs US Dollar Technical Analysis

The euro started out the Wednesday session a bit soft, dropping slightly. However, once the markets started to turn towards the New York session, the buyers returned, to show an interest in trying to break out again. The pair is currently trying to price in the idea of the Federal Reserve pausing interest rates, and therefore trying to reprice the idea of a Fed that is flat in its trajectory.

Whether or not this is true remains to be seen, but traders certainly believe this. (It should be noted that this isn’t the first time that they have.) However, it is worth nothing that there has been a lot of technical damage done to the downtrend, so things are getting very interesting to say the least.

As the pair is now threatening the 1.09 level, I am looking at this as a market that is at a crossroads. The 1.09 level being taken out to the upside cannot be a signal that is ignored, despite the fact that the European Central Bank is likely to loosen its monetary policy long before the Fed. It seems at this point; the markets are looking for a “risk on rally” into the year end. We will see.

All of that being said, you simply can only do one thing at the moment: Follow price, with a reasonable position size. That has been the case for a while now, as fundamental analysis is murky at best. The reality is that emotions are driving the markets, and the trading public wants there to be cheap and easy money again. While I don’t necessarily think we are anywhere near seeing the Fed change its tune, the momentum alone could be a driver of the market for the time being.

However, if we were to see the market drop back below the 1.08 level, that could be a sign that the longer-term trend has returned, and that the euro will continue to drop. There was a lot of buying on Tuesday, or perhaps short covering? Only time will tell. Position size your trades cautiously at this point, as these moves are tricky to say the least.

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