EUR/USD Forecast – Euro Pulls Back Into the Weekend

EUR/USD Forecast Video for 01.05.23

Euro vs US Dollar Technical Analysis

The euro fell a bit during the trading session on Friday, as it looks like people are willing to take a little risk off heading into the weekend. We see the US dollar strengthened against multiple currencies, but the biggest mover of the day has been selling of the Japanese yen. Ultimately, I think this is a market that has got a little overdone, and I think we should see a little bit of a pullback anyway.

Looking at this chart, you can see that the 50-Day EMA sits near the 1.08 level and is rising. Then should be dynamic support, so I think that makes a decent target for a pullback. This of course assumes that we even get that deep of a pullback, because the market has shown a proclivity to continue finding buyers on dips. A lot of this stems from the idea that the European Central Bank is going to remain hawkish, while the Federal Reserve will eventually slow down, with the market assuming it to happen before the ECB.

Whether or not this is true remains to be seen, but at this point it’s very likely that we will continue to see more of a “buy on the dip” attitude. This does not mean we won’t get the occasional selloff, but ultimately, I think there will be a lot of volatility ahead. It’s worth noticing that we have quite a strong trend, so regardless of what should be happening, the reality is that the market has been finding momentum.

Ultimately, this is a situation of risk on/risk off. Ultimately, if we do break higher, then it becomes more of a “buy-and-hold” type of situation. The markets continue to be noisy, so be cautious about getting overly aggressive, but it looks like we are in the midst of a short-term pullback. On the upside, one would assume there should be a significant amount of resistance near the 1.1250 level and then again at the 1.15 level as they both are psychologically important as well as structurally important in the past. Ultimately, expect more volatility going forward, as traders jump back and forth from the latest headlines.

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