EUR/USD Price Forecast – Euro Fails to Hang On to Gains

The Euro initially tried to break down a bit during the trading session on Thursday but then turned around to rally before giving up those gains again. This choppy action makes quite a bit of sense, because we are sitting at the bottom of the larger consolidation area. The European Central Bank continues to be very loose with its monetary policy, while the Federal Reserve is slowing down, relatively speaking. (Yes, I realize that the Fed is out-of-control the moment, but they are “less out-of-control” than the ECB.)

EUR/USD Video 08.05.20

That being said, the European Union also has to worry about things like Italy being downgraded to junk status in the bond market, and the fact that it does not have a federalized monetary system. All things being equal, I like shorting the Euro, but we may get a small bounce from here due to the technical support. If we break down below the 1.0750 level then it opens up the door to the 1.0650 level, and then finally 1.05 after that. If we were to break down below there, we are probably looking at a move all the way down to the 0.80 level based upon historical charts going back to the Deutschmark.

To the upside, I believe that the 50 day EMA will probably act as a bit of the ceiling in the market, which is fairly close to the 1.09 level at the moment. Keep in mind that the jobs number could throw a lot of disarray into this market in the short term, but I still remain bearish and would sell any spike after that jobs number.