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EUR/USD Forecast – Euro Gives Up Early Gains

By:
Christopher Lewis
Published: Oct 9, 2023, 13:38 GMT+00:00

The euro initially tried to rally at the open on Monday, but then turned around to show signs of hesitation.

Euro, FX Empire

EUR/USD Forecast Video for 10.10.23

Euro vs US Dollar Technical Analysis

The euro initially tried to rally during the trading session on Monday but gave back the gain as we continue to see a lot of questions asked about the overall risk appetite around the world. The weekend invasion into Israel of course is not helping the situation at all, and it looks like we are running back to the US dollar. Yes, the Euro is oversold, but quite frankly most crashes happen from oversold conditions. In other words, the market doesn’t bounce when you expect it to.

If we break down below the recent lows, the market is likely to go looking to the 1.0250 level, and then possibly even the parity level. A short-term rally at this point in time would more likely than not continue to see a little bit of hesitation, but if we were to break above the 1.06 level, then we could go looking to the 1.07 level, which is closer to the 50-Day EMA. Anything above there would be a major change in attitude, but quite frankly I think at this point in time we will have a lot of people looking for safety, so it is difficult to imagine the situation being that suddenly people want to take a lot of risk in the markets with the backdrop that we have. Having said that, we’ll have to wait and see but it’s likely that interest rates will continue to be one of the bigger drivers of the markets, so pay close attention to the 10 year yield in the United States, and of course the same thing in Germany.

All things being equal, any short-term rallies will be very unlikely to stick, as there are plenty of reasons to believe that people will be looking toward the safety of the US dollar, and perhaps even the bond markets as it’s much easier to simply collect 5% putting money into a bond that it is to take on any type of risky market. The euro of course is going to be a problem for those who hold it also, due to the fact that the EU seems to be heading into a recession, and of course we are going to have to deal with the idea that energy could be a problem this winter as well.

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

About the Author

Chris is a proprietary trader with more than 20 years of experience across various markets, including currencies, indices and commodities. As a senior analyst at FXEmpire since the website’s early days, he offers readers advanced market perspectives to navigate today’s financial landscape with confidence.

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