EUR/USD Forecast – Euro Gets Hammered to Kick Off the Year

EUR/USD Forecast Video for 04.01.23

Euro vs US Dollar Technical Analysis

The Euro has fallen rather hard during the trading session on Monday, to slice through the 1.06 level. At this point, the market looks as if it is ready to go lower, but it may be noisy on the way back down. Keep in mind that the market participants are extraordinarily long the Euro, and extraordinarily short the US dollar. However, keep in mind that the market is leaning in one direction, and that’s typically when you get major shifts in attitude. If we break down below the bottom of the candlestick for the trading session on Monday, I suspect the Euro goes down to the 200-Day EMA.

On the other hand, if we do break above the 1.08 level, then it should open up the possibility of the Euro to go looking for the 1.10 level. Ultimately, I think that would take some type of major shift in attitude, we may have just formed a “micro double top.” The US dollar being oversold will now be confirmed sometime this week, especially if the jobs number on Friday ends up being much hotter than anticipated. Inflation is starting to drift lower in Europe, so this move makes quite a bit of sense, especially as people will have to unwind their positions.

The size of the candlestick is rather ugly, so I do think that we have some follow-through just waiting to happen. Whether or not it happens in the short-term or if it takes a couple of days is completely different question, but at this point it certainly looks as if it could be threatened.

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