EUR/USD Forecast – Euro Continues to Show Support

EUR/USD Forecast Video for 01.03.23

Euro vs US Dollar Technical Analysis

The Euro has initially pulled back during the trading session on Tuesday but found enough support underneath the 1.06 level to turn things around and show signs of life. The overall market structure of the day seems to be a bit positive, so it does make a certain amount of sense that we would see the Euro trying to pick up a bit of momentum. The 50-Day EMA sits just below the 1.0675 level, and therefore it looks as if it is going to be a bit of resistance.

Furthermore, you need to keep an eye on the fact that we are between the 50-Day EMA and the 200-Day EMA indicators, because they attract a lot of attention. Typically, when a currency pair is sitting between these 2 indicators, it means that there are probably going to be traders in both directions pushing quite hard. Typically, when you find the market in this range, there is an explosive move sooner or later as one side or the other finally loses.

If we break above the 50-Day EMA, it’s possible that the market goes looking to the 1.08 level. On the other hand, if we break down below the 200-Day EMA, is very likely that we would see a huge move lower. On a break down below the 200-Day EMA, I suspect that we will eventually go down to the 1.03 level, and then eventually the parity level which of course would be an area that would attract a lot of attention. Keep an eye on the interest rate situation in the United States, because recently the 2 year and the 10 year have seen moves higher in yield.

That does typically help the US dollar, but ultimately this is a situation where the markets are in flux, and therefore a lot of noisy behavior does make significant sense. The European Central Bank has reiterated its mission to keep inflation down to 2%, but at the same time the Federal Reserve has reiterated its attitude of staying tight for longer. Because of this, a lot of choppiness is more likely than not going to be the case going forward, so therefore position sizing will be crucial.

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