EUR/USD Forecast – Euro Has a Choppy Friday

EUR/USD Forecast Video for 05.06.23

Euro vs US Dollar Technical Analysis

The euro has gone back and forth during trading on Friday, as the Non-Farm Payroll number came out almost triple as expected. Because of this, the market continues to see a lot of confusion, because traders are trying to sort out whether or not the Federal Reserve will have to tighten monetary policy going forward, or if they will step back. In my 14 years of trading, I have never seen so much disconnection between the Federal Reserve and the trading public as I have over the last year. Because of this, it’s almost as if the entire market is a “2 speed market”, with some people focusing on where the market is going based on the idea that the Federal Reserve is here to bail everybody out, and others out there looking at it through the prism of that the Federal Reserve will have to fight inflation.

At the end of the day, the European Central Bank also remains very tight, but quite frankly has seen Germany go into recession, so it’s more likely than not that the Europeans have to blink first. If that’s going to be the case, then it should be strong for the US dollar. However, we need to break down below the 200-Day EMA, in order to get overly bearish, because then you start to have a technical breakdown as well. If we do break down below there, then the 1.05 level underneath would be a target, and therefore an area that will attract a lot of attention due to the previous action that we have seen in the market at that level.

If we break above the top of the candlestick for Friday, then we will have to deal with the 50-Day EMA, which is closer to the 1.0850 level, which of course is where you would anticipate some technical trading due to the moving average. With that being said, I like the idea of waiting to break out of this little tight range to start putting serious money together on a position and then simply following the overall momentum.

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