Euro Gives up Early Gains

Euro vs US Dollar Technical Analysis

The Euro has rallied significantly during the trading session on Thursday but gave back gains near the crucial 1.0933 short-term resistance barrier. By doing so, the market shows just how much negativity there is. At this point, the 1.08 level underneath continues to be significant support, which I believe extends down to the 1.06 level. That is an area that has been very noisy over the longer term, and therefore I think it is going to be difficult to break through it, as the market will be very noisy in that area. It is not that we cannot break down below there, it is just that it is going to take quite a bit of effort.

When you look at the fundamentals, the European Union continues to struggle with energy. This is going to be a major problem for their economy, and therefore it is difficult to imagine a scenario where the ECB can jump into the market and start tightening monetary policy without causing some type of major issue. The interest rate differential will continue to expand between the United States and the European Union, thereby adding more pressure to the downside.

Furthermore, the overall trend has been negative for so long that it is going to take quite a bit of inertia to turn things around. If we were to do that, at the very least we need to get above the 50 Day EMA. That obviously would take a lot of momentum, and even then, I am not completely convinced until we get above the 1.12 handle. At this point, it looks like the market is going to continue to be a “fade the rally” type of situation.

EUR/USD Price Forecast Video 22.04.22

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