EUR/USD Price Forecast – Euro continues to show volatile trading range

The Euro went back and forth during trading on Thursday again as we continue to find the 1.11 EUR level as a bit of a ceiling, but also have significant support just below. Ultimately, the market is waiting with bated breath to whatever happens and comes out of Jackson Hole.
Christopher Lewis
EUR/USD daily chart, August 23, 2019

The Euro went back and forth during trading on Thursday as we continue to see a lot of noise just below the 1.11 handle. That being the case it looks as if the market is still going to struggle to find its direction in the short term. As the Jackson Hole Symposium is getting underway in Wyoming, central bankers from around the world are discussing monetary policy, which of course will have a massive effect on where things go next.

EURUSD analysis Video 23.08.19

All things being equal I do think that we go lower though, because quite frankly the Euro has a ton of trouble attached to it. At the very least we have low demand for negative yielding bonds coming out of Germany. The interest rate differential alone drives the US dollar higher as so many bonds out there are issuing negative yield that Treasuries look rather good. That of course drives up demand for the US dollar, so it’s a bit of a feedback cycle.

To the upside, the 50 day EMA which is pictured in red on the chart is significant resistance. I think that the market will struggle to get above there even if we do rally from here. Alternately, the 1.10 EUR level underneath is massive support. If we can break down through that level, then we probably drop down to the 1.05 EUR level based upon the Fibonacci retracement tool. We are below the 61.8% Fibonacci retracement level and that typically means you unwind down to the start of the move.

Please let us know what you think in the comments below

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