EUR/USD Forecast – Euro Plunges After CPI Misses

Euro vs US Dollar Technical Analysis

The Euro plunged in the early hours on Tuesday as the flash CPI numbers came out at 1.8%. This is below the ECB’s mandated 2% target, and therefore it suggests the ECB may find itself in a situation where it has to loosen monetary policy even further.

Because of this, we’ve seen the euro currency take a bit of a nosedive, and that’s not a huge surprise, considering that not only do we have this issue, but we also have concerns about global growth and geopolitical instability, which almost always favors the US dollar anyway. When you look at the longer term chart, it’s obvious that we continue to just simply go from one big round figure to another, as we have seen for some time.

So, pulling back from the 1.12 level isn’t a huge surprise. And now in fact, you can even start to make the argument that perhaps we just formed a double top. The MACD certainly seems to think that on the 4-hour and the daily charts both. So, are we at the top of the range and will we see the US dollar pick up strength from here for a bigger move? I think that’s the real question here. It certainly looks like it’s a real possibility, but it is worth noting that a little later in the day we’ll get manufacturing from America and that could cause some chaos as well. Either way, the 1.12 level above seems to be like a brick wall for the Euro.

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