EUR/USD Price Forecast – Euro Bounces

Euro vs US Dollar Technical Analysis

The Euro has rallied rather significantly early during the trading session on Thursday, but still has a lot of noise to deal with just above to be convincing. Because of this, it is more likely than not a scenario where the pair will eventually drop. If and when it does, I plan on joining that selloff, as the trend has been so strong. In fact, the market would need to get above the 1.08 level for me to be convinced that it even has a shot at changing the overall trend.

The ECB continues to discuss the possibility of 25 basis point hikes, but at the end of the day it should be noted that the Federal Reserve is much more aggressive at this point, and much more likely to tighten monetary policy for a bigger and larger amount. The Federal Reserve is running off its balance sheet starting yesterday, so that is a form of monetary tightening as well.

While all central banks around the world have to worry about inflation, the reality is that the Federal Reserve has the tools and the wherewithal to actually do it. The biggest problem that Europe is going to face is that they are dealing with an economy that is struggling with energy. That is a huge negative for an economy, and therefore it would not be a big surprise if we started to see weakness coming out of the EU yet again. On the downside, I would look for a move to the 1.05 level. However, keep in mind that the jobs never comes out on Friday, and that will have quite a bit of new volatility introduced into the marketplace.

EUR/USD Price Forecast Video 03.06.22

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