EUR/USD Forecast – Euro Looks a Bit Overdone in The Short Term

Euro vs US Dollar Technical Analysis

The Euro has gone back and forth rather significantly during the course of the early hours on Thursday. But at this point I think you have a situation where the market is trying to pull back toward the 1.11 level. If we were to break down below there, then I think you’ve got a situation where we could even break down to the 1.10 level. All things being equal, this is a market that I think is trying to determine whether or not it has the momentum to continue going higher. And at this point, I think if we were to break above the 1.1175 level, then the euro could go to the 1.1250 level.

All things being equal, a lot of this comes down to the Federal Reserve and whether or not they are cutting rates, but although we already seem to know that they are in September, there are a lot of questions asked about how aggressive they will become. I don’t know that the market has it quite right yet because there is the possibility that they become aggressive, but if they do, then that’s a real concern about the global economy, and that typically favors the US dollar due to the fact that the flow of money tends to end up in the treasury markets.

That being said, from a technical analysis standpoint, it’s worth noting that we are still in the overbought condition of the Relative Strength Index and have seen a little bit of divergence when it comes to the RSI and price action. So that does suggest that perhaps a pullback is somewhat imminent.

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