EUR/USD Forecast: Threatens 200-Day EMA

• The EUR/USD  rallied again during the trading session on Monday, as the PMI figures coming out of the United States showed contraction.
• A lot of traders now are starting to bet on the Federal Reserve pivoting sooner rather than later, which could have major implications in the Forex markets.
• Ultimately, I think this is a situation where you have a lot of questions to be asked soon, and as a result, we are either going to see this market take off to the outside, or we are going to finally see a pullback. Ultimately, this is a situation where we have the decision to make, and we will be making it.

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The 200-Day EMA is now back in the picture so that obviously has a lot to say about where we go next as well, so I would be cautious to think that it’s going to be simple. Furthermore, Thursday is Thanksgiving Day in the United States, so therefore it is likely to have a major influence on volatility and liquidity. Because of this, you need to keep in mind that at least half the day is going to be somewhat sketchy, to say the least. Because of this, it will be interesting to see how this plays out, but I do think that we have a situation where we could see the occasional weird spike.

Next Week is Crucial

If we break above the 1.04 level, then all eyes will be on the 1.05 level, which of course is a large, round, psychologically significant figure, and enough of a break that I would start to think about a potential uptrend. Granted, the ECB is likely to continue having to fight inflation, but it also has a very weak economy that must deal with, so it’ll be interesting to see which route they choose to take over the longer term.

I think we are at a serious decision point, so we should have answers in the next several trading sessions. Next week should be crucial, so make sure you are paying attention to this pair because it will probably not only show what’s going on with the Euro, but it may give you a bit of a “heads up” on what the US dollar might be doing. If the US dollar falls against the Euro, typically it is weak against most other currencies around the world.

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