EUR/USD Forecast – Euro Recovers Slightly

EUR/USD Forecast Video for 05.10.23

Euro vs US Dollar Technical Analysis

The euro rallied significantly during the trading session on Wednesday to show signs of profit-taking after the massive selloff that we had seen recently. The market has broken back above the 1.05 level, which of course is a large, round, psychologically significant figure. This obviously will attract a lot of people, but at the end of the day, it’s just another number, and nothing more than that. The market rallying from here opens up the possibility of a move to the 1.06 level, which we had sold off from previously. Furthermore, it does make a certain amount of sense that we are seeing a bit of a bounce as we have fallen so hard, and of course we have the jobs numbers coming out on Friday.

The size of the candlestick is somewhat impressive, but at the end of the day it doesn’t necessarily mean anything against the longer-term trend. I’ll be looking for signs of exhaustion on short-term charts to get involved and start shorting this market again, as the situation in Europe looks to be rather dire, and of course interest rates in the United States continue to rise. This makes the US dollar more attractive, and therefore we continue to see plenty of downward pressure. Furthermore, the situation in Europe suggests that there will probably be loosening monetary policy coming out of the ECB much quicker than the Federal Reserve, so this is a bet on that.

The “death cross” occurred recently, when the 50-Day EMA dropped below the 200-Day EMA, signaling a longer term downtrend. Because of this, I think it’s probably only a matter of time before we see further technical downward pressure. Regardless, this is a market that I do not have any interest in trying to buy anytime soon, and therefore if we do rally from here, I’ll be looking for signs of exhaustion that I can take advantage of. Ultimately, this is a market that I think will offer plenty of value to pick up “cheap US dollars” given enough time, that may be especially true as we get closer to the end of the week. Ultimately, a little bit of caution probably goes a long way at this point.

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