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EUR/USD Price Forecast – Euro breaks down over contagion fears

By:
Christopher Lewis
Updated: Aug 11, 2018, 05:15 UTC

The EUR/USD pair had an eventful Friday, breaking down not only below the psychologically and structurally important 1.15 level, but has also smashed through the 1.14 level after that. There are major contagion fears when it comes to Turkish banks and European banks, so I think this may begin to accelerate.

EUR/USD daily chart, August 13, 2018

No doubt about it, Friday was absolutely brutal for anybody looking to buy the Euro. The 1.15 level stop loss area was ran hard, and we even broke down below the 1.14 level as people are concerned about Turkish banks bringing down European banks because of sovereign debt and the like. More contagion issue for European banks seems to be a bit of a replay, and it certainly isn’t what the region needs at this point. It now looks as if the Euro will continue to sell off, and short-term rallies will be selling opportunities unless we can recapture the 1.15 level above, something that looks a bit suspicious at this point considering how rough Friday was.

I believe that the market continues to be very volatile, but I do think that the 1.13 level will bring in a certain amount of value hunting. At this point though, I think that EUR/USD pair could really start to fall apart. The Turkish lira lost over 11% at one point during the day, and that has people worrying about outstanding debts in Turkey for already beleaguered and embattled European banks.

In a bit of a “risk off” move, it makes sense that the Euro would fall against the greenback of all currencies, as it has been strengthening anyway. This was a significant break of support and could bring in a fresh new trend lower and the next leg to lower levels. Remember, if we can recapture 1.15, then things change.

EUR/USD Video 13.08.18

About the Author

Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.

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