EUR/USD Forecast – Euro Sees Weakness on Thursday

EUR/USD Forecast Video for 03.03.23

Euro vs US Dollar Technical Analysis

The Euro has fallen significantly during the day on Thursday to almost wipe out the gains from the Wednesday session against the greenback. At this point, the market seems as if it is trying to determine what to do next, as we are below the 50-Day EMA and above the 200-Day EMA, which quite often causes a bit of noisy behavior. With that in mind, it is more likely than not going to continue to be a market that is very choppy. That being said, it is also probably worth noting that the market has recently pulled back from the 50% Fibonacci level after the nice recovery, and now looks like it could very well continue the overall downtrend that we had seen last year. If that ends up being the case, we could find this market reaching down to the 1.00 level rather quickly.

In the meantime, it’s very likely that the market will continue to be noisy and more or less in consolidation as there are no real drivers at the moment that traders seem to be queuing on other than perhaps bond yields. With that in mind, pay close attention to the 10 year yield in the United States, because it could have an outsized effect on what happens next. The tightening of monetary policy in the United States has been like a wrecking ball against almost everything and should continue to be so. The Federal Reserve continues to reiterate its “tighter for longer” thesis, and it appears that the markets are finally starting to pay attention to it. If the markets do become convinced that the Federal Reserve will remain tight with its monetary policy for a long term move, it will more likely than not send a lot of money into the US dollar again, and away from risk assets.

If we do break above the 1.07 level, we probably have a shot to reach the 1.08 level rather quickly, but above there things get rather difficult for the bulls to make a move. On the other hand, the 200-Day EMA being broken to the downside will more likely than not kick off a lot of systematic trading. That systematic trading will probably have a bit of a snowball effect on the momentum of selling pressure.

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