EUR/USD Forecast Video for 31.05.23
Euro vs US Dollar Technical Analysis
The euro has initially fallen below the 200-Day EMA, only to turn around and show signs of life. The uptrend line is also in the same neighborhood, so it suggests that we are at an area where the buyers must come back into the picture. Alternatively, if we can hold here, then it’s possible that we could see the euro turn around and rally significantly. However, you should also keep in mind that the German economy has entered a recession, which means the European economy is going to do the same soon enough.
It’ll be interesting to see how this plays out, because we still have the game out there as to whether or not the Federal Reserve is going to loosen monetary policy anytime soon. There are a lot of traders out there that think it’s coming later in the year, but the Fed remains steadfast at the moment. As long that’s going to be the case, it’s very likely that we would see a lot of noisy behavior as people try to figure out what’s going to happen next. If we were to turn around and break down below the bottom of this candlestick though, then I would become aggressively short of the euro, as it would probably end up being a major trend change. If we break above the top of the candlestick for the day, then it’s possible that we could go to the 50-Day EMA, which is closer to the 1.0850 level, an area that is very likely to be crucial.
Keep in mind that volatility is going to be a major issue with this market, just as it will with many others. Ultimately, I think the market does bounce from here but whether or not it changes the overall attitude would be a completely different question altogether. Keep in mind that the US dollar is considered to be a “safety currency”, and therefore if there are a lot of economic concerns out there, then it makes sense that we would see a lot of back and forth as risk appetite waxes and wanes.
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This article was originally posted on FX Empire