EUR/USD Forecast – Euro Continues Consolidating In a Flag Pattern

EUR/USD Forecast Video for 23.10.23

Euro vs US Dollar Technical Analysis

The euro pulled back just a bit during the trading session on Friday, but then turned around to show signs of life again. Ultimately, we are still very much in a bearish flag pattern, so therefore I think eventually we will get the ability to short this market on signs of exhaustion. Heading into the weekend, it doesn’t look like we have a whole lot going on, and therefore it’s likely that we have more choppiness ahead of us. All things being equal, the market breaking down below the bottom of the uptrend line of the bearish flag is probably what we will see next.

If that were to happen, then we could see the market drop down to the 1.05 level, which is a large, round, psychologically significant figure. This area has offered a little bit of support recently, and therefore it’s likely that we will continue to see that area offer it yet again. Ultimately though, I do think that we break down through there if the economic situation in the European Union continues. Furthermore, we have seen a lot of inflationary pressure in the United States, suggesting that perhaps the Federal Reserve will stay tight for longer than people wanted.

Looking at the chart, you can see this bearish flag is very prominent, and if we were to break down below the 1.05 level, it opens up the next “FOMO trade”, as we go down to the 1.0250 level, then eventually the parity level, which I think it’s a very real possibility. That being said, if we were to turn around and take out the 50-Day EMA to the upside, then the market is likely to go looking to the 200-Day EMA.

Expect a lot of choppiness, but you should also recognize that any time you get an opportunity to pick “cheap US dollars”, you should probably do so. With the European Union heading into a recession, and of course all of the geopolitical concerns out there, it does make a certain amount of sense that the greenback will continue to attract a lot of attention and therefore people will be more than willing to jump into it.

For a look at all of today’s economic events, check out our economic calendar.