EUR/USD Forecast – Euro Bounces Slightly at Bottom of Range

EUR/USD Forecast Video for 14-02-2024

Euro vs US Dollar Technical Analysis

The Euro initially pulled back a bit against the US dollar on Tuesday but has turned around to show signs of life at the 1.0750 level. This is an area that has been significant support multiple times, so it shouldn’t be a huge surprise that we have in fact recovered a bit.

Between the 1.0750 level and the 200-day EMA, which presently resides just above the 1.08 level, there does seem to be a magnetism for price. I think it does make a certain amount of sense because we have a lot of questions to ask of central banks right now. The majority of late last year was all about the idea that the Federal Reserve was going to start cutting rates.

However, since then, it’s become abundantly clear that the European Central Bank has to do the same as Germany has entered a recession. And in fact, during the latest Central Bank meeting, the ECB did in fact open the door to the idea of loosening monetary policy. Because of this, the euro has since fallen, and now we are trying to sort out whether or not one of these banks is going to be a bit more hawkish than the other.

I don’t necessarily think that is going to be the case. And therefore, I think you have a situation where the market is trying to carve out some type of longer term range. That’s very typical for this pair. And therefore, it falls right in line with most years. As things stand right now, there is an area around 1.0750 that offers massive support, while the 1.10 level above offers massive resistance.

If we were to break down below the 1.0685 level, then I think you have a situation where the euro really starts to crumble, perhaps heading down to the 1.05 level. This would be a major win for the US dollar, and you would more likely than not see USD strength across the board in the FX markets. The opposite would be very negative for the USD across the board as well.

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