EUR/USD Forecast – Euro Continues to Sit Still After Massive Run Higher

EUR/USD Forecast Video for 18.07.23

Euro vs US Dollar Technical Analysis

The euro‘s remarkable surge in recent days has encountered a roadblock as upward momentum slows down. It is only natural to witness a period of consolidation after such a rapid ascent, as the financial markets tend to adhere to the forces of gravity. The need for market churning becomes apparent, as sustained one-directional movement is unrealistic. In this article, we will explore the current state of the euro and its potential trajectory, considering key indicators and factors influencing its movement.

One crucial indicator that market participants are closely monitoring is the 50-Day Exponential Moving Average, which is currently positioned around the 1.09 level. The 50-Day EMA has been steadily rising and holds significant historical significance as a support area. Although there are no definitive signs of an immediate reversal on the chart, breaching the 50-Day EMA would undoubtedly be a negative development.

If the euro were to dip below the 50-Day EMA, it is likely to attract a wave of value hunters eager to capitalize on the opportunity. This surge in buying pressure could potentially propel the market towards the 1.15 level in the long term. Traders are currently viewing the euro through the lens of a Federal Reserve-induced slowdown, which has contributed to the currency’s recent surge. Factors such as lower-than-expected CPI and PPI figures have suggested a potential cooldown in U.S. inflation, making it important to closely monitor the Federal Reserve’s monetary policy in the near-term.

While the accuracy of the inflation narrative remains debatable, the euro is expected to face some headwinds in the near term. Consequently, a negative start to the upcoming week is anticipated. However, it is likely that buyers will eventually step in to support the market, mitigating the initial decline. Caution is advised if the euro were to continue its upward trajectory without a period of consolidation, as the currency appears to be overstretched at this juncture.

The euro’s upward momentum has encountered resistance, leading to a necessary period of consolidation. Market participants are attentively observing the 1.09 level, which is supported by the rising 50-Day EMA. While caution is advised due to potential headwinds, there are opportunities for value hunters to enter the market. Additionally, a potential move towards the 1.15 level indicates an interesting path ahead for the euro. However, it is important to note that the US dollar can be considered a “safety asset,” which may come into play if unforeseen events impact the markets in the near future.

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