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EUR/USD Forecast – Euro Looks Stagnant and Hesitant

By:
Christopher Lewis
Published: Sep 22, 2023, 13:18 GMT+00:00

The Euro continues to see a lot of hesitation and uncertainty.

Euro coins, FX Empire

In this article:

EUR/USD Forecast Video for 25.09.23

Euro vs US Dollar Technical Analysis

The Euro experienced a noticeable drop in value during Friday’s trading session, reflecting the ongoing market turbulence and uncertainties. As the EUR/USD currency pair seeks stability and direction, it’s becoming increasingly evident that the Euro is grappling with persistent challenges. Notably, a significant technical indicator, the 50-Day Exponential Moving Average, appears on the verge of crossing below the 200-Day EMA, a development often referred to as the “death cross.” This critical event is unfolding near the lower boundary of a broader trading channel that was recently breached.

In this environment, it’s expected that the Euro will continue to encounter difficulties. However, it’s worth noting that short-term rallies may offer opportunities for investors looking to acquire US dollars at relatively favorable rates. Should the EUR/USD pair decisively break below the session’s low on Thursday, it could potentially pave the way for a descent towards the psychologically significant 1.05 level. This level holds importance not only due to its “big figure” status but also because it has played a pivotal role in the currency pair’s history. Consequently, traders are likely to view it as a major target.

The Euro’s struggle to find solid ground is further compounded by recent decisions made by central banks. While the European Central Bank has chosen to raise interest rates, the Federal Reserve, Swiss National Bank, and Bank of England have all maintained their existing interest rate positions. This divergence in monetary policies could incentivize investors to seek refuge in the US dollar, placing additional downward pressure on the Euro.

Currently, a prudent strategy involves considering short positions on the EUR/USD pair during rallies, as this approach may unlock significant trading opportunities. For a substantial upward movement to materialize, the Euro would need to surpass the 1.08 level. However, this achievement is currently overshadowed by numerous obstacles. Although the 1.06 level may offer some temporary support, it should be viewed as a short-term scenario that warrants close monitoring.

In summary, the Euro is navigating a challenging phase marked by consolidation and uncertainty. The looming “death cross” adds to the Euro’s woes, coinciding with a breach of the lower boundary of a recent trading channel. Short-term rallies represent opportunities to acquire US dollars at attractive exchange rates. The breaking of Thursday’s session low could drive the EUR/USD pair towards the 1.05 level. Diverging central bank policies contribute to the Euro’s struggles, prompting cautious market participants to closely monitor the pair for insights into the US dollar’s performance.

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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