EUR/USD Forecast – Euro Pulls Back Early on Wednesday

EUR/USD Forecast Video for 21.12.23

Euro vs US Dollar Technical Analysis

The euro pulled back just a bit during the trading session on Wednesday, as it looks like the 1.10 level above continues to be a major resistance barrier. If we can break above there, then it’s obviously a very bullish sign. That being said, the market is likely to continue to see a lot of volatility and sideways action due to the fact that we are heading toward the Christmas holiday, and as a result it’s likely that we will continue to see a lot of trading volume dry up. If that is the case, then the market is likely to continue to see sideways action more than anything else, as traders care less about what is going on.

Furthermore, next week’s trading will probably be thin as well, so I think we have finally reached that time of year when things settle down until we get through the holiday season. That doesn’t mean that we can’t move, because quite frankly a serious lack of liquidity could also cause the market to move rather quickly. That being said though, the market is likely to be quieter than anything else, and therefore I just don’t have any interest in putting a lot of money into work at this point.

With that being said, I think you have to look at this through the prism of the market that longer-term probably will move on interest rate differentials more than anything else, due to the fact that the Federal Reserve is likely to continue to loosen its monetary policy next year, while the ECB pretends like it won’t do so. With that being the case, the market has to look at this through the prism of potential interest rate differentials, and of course the trajectory of where the market scales. That being said, you should also keep in mind that the market also has to look at geopolitics, due to the fact that the US dollar is considered to be a major “safety currency”, that people have to pay close attention to. If something bad happens, then money will flow back into the US Treasury markets, which will lift the US dollar.

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