EUR/USD Forecast – Euro Drops to Kick Off The Week

EUR/USD Forecast Video for 06-02-2024

Euro vs US Dollar Technical Analysis

The Euro has fallen pretty early during the trading session on Monday, as it looks like the US dollar is really starting to flex its muscles again. At this point, I think we’re going to try to break towards the 1.07 level, an area that I do think would offer a significant amount of support. Breaking down below that level then opens up the possibility of a move down to the 1.05 level.

On the other hand, if we do turn around and try to take out the 200 day EMA just above, that could open up a move to the 1.09 level, but right now I’m not holding my breath for that as it appears that the Federal Reserve is going to stay tighter for longer. And of course, the ECB has to worry about the Germans going into a recession.

At this point, we are testing and probing the bottom of a major support level and if we break through it, I think it will cause a lot of FOMO selling. The US dollar is strengthening against most currencies at the moment and, of course, the Euro is the most significant proxy of them all on us dollar strength. While I would not necessarily get aggressive down here, I do think that perhaps trying to short the Euro makes the most sense, or at the very least I don’t want to buy it.

However, if we were to break above the 50 day EMA, you can’t argue with that. It would just simply be a move that was too strong to ignore. In the meantime, I expect a lot of choppy behavior and I think they will continue to move based on the 10 year note more than anything else and what’s going on with its yield. The 10 year yield of course is highly influential on whether or not people want to buy us dollars overall. I think this is a market that over the next couple of days, we should get a lot of questions answered if we’re going to break down or are we going to bounce back up into the previous consolidation region?

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