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EUR/USD Forecast – Euro Hanging On to the 200-Day EMA

By:
Christopher Lewis
Updated: Mar 8, 2023, 14:38 UTC

During the early hours on Wednesday, the Euro started to drift lower, but it appears that the 200-Day EMA may end up causing a little bit of support.

Euro, FX Empire

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EUR/USD Forecast Video for 09.03.23

Euro vs US Dollar Technical Analysis

The Euro dropped a bit during the early hours on Wednesday, dipping below the 200-Day EMA. By doing so, it attracted a bit of value hunting, as that indicator will quite often set off algorithms. Underneath, we have the 1.05 level, a recent swing low in December 2022, which could offer support. In other words, this is an area that will more likely than not have a lot of noise and buying pressure around it.

If we do break down below the 1.05 level, then it’s likely that the “trapdoor effect” starts the kickoff, that being said, there are a lot of FOMO trading when we get a huge rush lower. In this general area, I would expect the markets dropped down to the 1.03 level. The 1.03 level is a minor support level, and therefore I think it probably will eventually find its way down to parity. This does make a certain amount of sense, especially after the Tuesday session and Jerome Powell stating in front of Congress that there may be the possibility of increasing rate hikes yet again in America, and at a higher velocity. That being said, there are a lot of moving pieces and just about anything could happen between now and the next big move.

Nonetheless, the massive selloff during the day on Tuesday is typically one of those candlesticks that does not happen in a vacuum, and there will more likely than not be a bit of follow-through. There may be short-term rallies, but I suspect that the short-term rallies will be sold into as not only do we have a tighter Federal Reserve, but we also have a dollar shortage in the debt markets globally, as emerging markets rush to pay back debts denominated in US dollars as rates continue to climb.

It would take a break above 1.07 for me to take a serious look at getting long of the Euro, something that I just don’t see happening very easily at this point in time. With that in mind, I’m looking to fade rallies that show the slightest hint of exhaustion, or a breakdown below that crucial 1.05 level underneath.

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

About the Author

Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.

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