EUR/USD Forecast – Euro Continues to See Choppiness

Euro vs US Dollar Technical Analysis

The Euro pulled back ever so slightly in the early hours on Tuesday as we continue to flirt with the crucial large, round, psychologically important figure of 1.10. The 1.10 level previously had been significant support, so now the fact that it’s offering a little bit of resistance in what is known as market memory is not a huge surprise. When I look at the chart on the four hour timeframe, I’m very interested in the 1.1050 region.

If we can break above there and take out what I look at as a major wipeout candle from last week, that could be the sign that we are in the midst of recovering. In a recovery, I could see the euro going all the way back to the 1.12 level. That being said, there is the alternate scenario where people start to look at the recent price action as a bearish flag. If we do break down from here, then I think your destination is eventually 1.08, although the 1.09 level will certainly have something to say as well.

Looking at the currency pair over the last several months, it’s basically just been a situation of going from one large, round figure to another in about a 400 pip range, with 1.12 being the top and 1.08 being the bottom. Keep in mind that both central banks are looking to loosen monetary policy, but recently we’ve seen some fairly inflationary numbers and perhaps leading indicators coming down to the United States, especially in the form of employment, that has people thinking that maybe the Federal Reserve might not be able to cut interest rates as quickly as Wall Street had hoped.

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