EUR/USD Forecast – Euro Gets Hammered Again

EUR/USD Forecast Video for 02.11.23

Euro vs US Dollar Technical Analysis

During the trading session on Wednesday, traders will be waiting to see what the Federal Reserve has to say. Here, early in the session, we have seen the euro take a significant amount of selling pressure, as the market is now testing the bottom of the bearish flag. Because of this, the market is likely to continue to be tenuous at best, and I suspect we have a situation where the market has to sort out what the Federal Reserve is going to end up doing, because quite frankly, it’s all about the US dollar at this point.

We already know that the European Union is likely to be in a nasty recession this winter, and of course there are the well-known energy issues that are going to be facing the Europeans shortly. With that being the case, the market is likely to continue to see a lot of selling pressure on the Euro going forward. Furthermore, it is noted that perhaps the Federal Reserve has at least one more interest rate hike between now and the end of the year coming, although it’s not expected to happen on Wednesday itself.

Rallies at this point in time should be selling opportunities, at least until we break above the 50-Day EMA, something that doesn’t look very likely to happen in the short term. Beyond that, we also have to pay close attention to the 200-Day EMA above there. All things being equal, this is a situation where the markets will continue to be more or less a “fade the rallies” type of situation, and while I would anticipate that the market eventually sells off, there could be a bit of a rally after the Federal Reserve announcement/statement, as traders will try to find a reason to believe that the Federal Reserve is on the sidelines.

That being said, we have seen this pattern before, and it’s very likely that we will continue to see volatility that favors the downside. If we can break down below the 1.05 level, then it opens up the possibility of a move down to the 1.0250 level. After that, we could be talking about a move down to the parity level.

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