EUR/USD Forecast – Euro Continues to See Choppy Behavior

Euro vs US Dollar Technical Analysis

The Euro has drifted a bit lower during the early hours on Friday, as it looks like we are going to head back to the 1.11 level. The 1.11 level is an area that has been important multiple times, so it is a bit of a magnet for price. This should not be a huge surprise that we are chopping around, because quite frankly, although the Federal Reserve is expected to cut rates in September, we already know this. And it’s also possible that the market has gotten far too ahead of itself with those rate cuts, aggressively pricing in the possibility of 2.25% in cuts between now and the end of next year. That’s not a good sign to say the least.

If we start seeing cuts that rapidly, there is a argument to be made for the economy being much worse than expected. And that will favor the dollar despite the fact that interest rates in America could be dropping. That’s because people will be running to the safety of the bond market.

So, this is most certainly a dynamic worth paying close attention to. It’s also worth noting that just above the 1.12 level where we peaked recently, there is a massive multi-year resistance barrier. So, all of this tracks pretty well with a market that, although positive, is going to be facing quite a few headwinds as we continue to go deeper into the trading year.

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