EUR/USD Forecast – Euro Plunges Amidst Risk Off Move

EUR/USD Forecast Video for 16.03.23

Euro vs US Dollar Technical Analysis

After Credit Suisse got the news that there was not going to be more of a bailout from Saudi financiers, suddenly there seems to be a concern of contagion in the European Union. After all, the bank has been the epicenter of a lot of problems for the last several years, and without assistance it plunged, sending the CDS market for that bank pricing in a 36% possibility of default. Because of this, it’s very likely that money is flowing away from the European Union as Credit Suisse almost certainly has its fingers all throughout the continent.

The euro plunged towards the 200-Day EMA, and by the time New Yorkers got to work was down 200 pips. If the market were to break down below the 200-Day EMA, it could open up a new rush of selling pressure, sending the Euro down to the 1.03 level, possibly even down to the parity level. In that environment it is likely that we would see quite a bit of US dollar strength in general, as traders will be looking for safety. It almost certainly means that the market will continue to favor the US dollar as money goes flying towards the US Treasury market.

If we do rally at this point, it’s difficult to imagine that it sticks anytime soon, with the 50-Day EMA more likely than not offering a little bit of resistance on the way up. Furthermore, the market struggled with the 1.07 area, an area that previously had been difficult to get above. If we break above the 1.08 level, then it opens up the possibility of a move to the 1.10 level, although at this point it seems very unlikely to be the case.

We recently had seen the Euro rally a bit due to the fact that a lot of traders are counting on the Federal Reserve cutting rates, due to the fact that there was a bailout of the bank in California just a few days ago. However, if the Europeans suddenly find themselves needing to worry about contagion, that essentially makes things “all even”, which of course would be bad all the way around in that environment.

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