EUR/USD Forecast – Euro Pulls Back From Big Figure

EUR/USD Forecast Video for 18.12.23

Euro vs US Dollar Technical Analysis

The euro pulled back just a bit during the trading session on Friday, as we tested the 1.10 level. The 1.10 level is an area that previously has been resistance, and of course is a large, round, psychologically significant figure. Ultimately, this is a market that has been overextended over the last couple of days, so this little bit of pullback does make a certain amount of sense. A pullback from here could open up and move down to the 1.09 level, but at this point in time if we were to turn around and break to the upside, the 1.10 level probably offers resistance yet again.

That being said, if we can break out, it’s likely that the market will go looking to the 1.1250 level, which is an area that previously had been a major resistance. Ultimately, if we can break above there, then the Euro will continue to climb over the longer term. In the short term, I think that we do see a lot of noisy behavior, which does make sense considering that the situation has seen a major shift in attitude over the last couple of days as the Federal Reserve has pivoted to the idea of possibly cutting rates next year, while the ECB claims they haven’t even thought about it.

Because of this, it does look like we are more likely than not going to continue to find buyers on dips, as the interest rate differential will start to change between the 2. Ultimately, you need to pay attention to the 10 year note in the United States, and more specifically, the yield coming out of the 10 year note. That being said, I expect the liquidity to start becoming an issue next week, and therefore it’s likely that moves could become a little bit more erratic. That being said, it certainly looks as if the buyers have been in control over the last couple of days, so therefore I think it’s a situation where you are looking to buy dips. 1.0850 level underneath is a major support level, followed by the 50-Day EMA which sits just below the 1.08 level.

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