EUR/USD Forecast – Euro Is Testing the 200-Day EMA

EUR/USD Forecast Video for 01.06.23

Euro vs US Dollar Technical Analysis

The euro fell a bit during the trading session on Wednesday, testing the 200-Day EMA again. Furthermore, we also broke down below the bottom of the hammer from the previous session, so that suggested perhaps we are starting to chip away at major support. If we do breakdown from here, then it’s possible that the euro drops to the 1.05 level, an area that is not only psychologically important, but it is also an area where we have seen a bit of a bounce from previously.

Rallies at this point in time still have to deal with a lot of negativity as of late, and it certainly does not help the situation that Germany has entered a recession. Remember, Germany is by far the largest economy in the EU and makes up for roughly 80% of the entire region as far as economic activity is concerned. As Germany goes, so goes Europe.

The 50-Day EMA is near the 1.08 level and is dropping. That is going to be the short term ceiling in the market, but if we were to break above there it would obviously be a very bullish sign. Alternatively, this is a market that I think given enough time we could see the market setting up for a “fade the rally” type of scenario. However, if we did break above the 50-Day EMA then we could reach toward the 1.10 level. That being said, I do think that the euro is probably starting to drift lower, because quite frankly I think there are a lot of concerns out there that will continue to plague the euro and of course continue to drive a lot of traders into the US dollar from the vantage point of looking for safety.

Ultimately, this is a market that eventually has to make a bigger decision, but right now it certainly looks as if we are going to favor the downside, and therefore I’m looking for short-term rallies to start selling again. That being said, if we break down below the bottom of the candlestick, I’m willing to sell there as well. I’m not going to be bullish until we break above the 50-Day EMA.

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