EUR/USD Forecast – Euro Plunges to The 50-day EMA

EUR/USD Forecast Video for 17-01-2024

Euro vs US Dollar Technical Analysis

The Euro fell rather hard during the trading session on Tuesday, as it looks like the 50-day EMA is now being tested. This is an area that I think would attract a lot of attention anyway, but we also have previous support in this region as well. The market has certainly seen a pretty significant breakdown, but really at this point in time, I think the market is still very much in a consolidation phase. So, with that, I think it’s probably a scenario where we need to be very cautious about trying to short this market. If we do break down from here, then what I will probably do is buy the US dollar against other currencies.

Although you could make an argument for the euro dropping down to the 200 day EMA, which is closer to the 1.08 level, underneath there is then the 1.0750 level. On the other hand, if we turn around and rally from here, then I think the 1.10 level continues to be a major resistance barrier and if we can break above there, then I think we could really take off to the 1.1150 level. All things being equal, I think this is a situation where traders are trying to sort things out in this general vicinity.

So, the next day or two could be very crucial since the interest rate differential makes a huge difference, but people may be starting to factor in the idea that the ECB may have to loosen monetary policy right along with the Federal Reserve. If that’s the case, that’ll take a lot of this uptrend out of the picture. Remember, everybody’s hoping that the Federal Reserve’s going to cut three, four, five times in 2024, but ultimately the ECB with Germany going into recession may find itself very much in the same kind of category. Because of this it would not surprise me at all to see what happens next, regardless of which direction it ends up going. The candlestick on the Tuesday session certainly suggests that there is a lot of negativity out there, so with that being said, I think you’ve got a situation where there is a lot of pressure.

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