EUR/USD Forecast: Strong Resistance at $1.08 Continues to Hold, Firm Dollar Pushing Bearish Breakdown

• The EUR/USD currency pair has initially tried to rally during the trading session on Tuesday but ran into a buzz saw of resistance in the 1.08 level.
• The 1.08 level has been important more than once, and it now looks as if it is offering itself as a top to the short-term range that we have been in.
• Ultimately, I think this is a situation where we are simply trying to figure out what we are going to do as far as the 50-Day EMA underneath.

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Focus on Technical Indicators

The 50-Day EMA is an indicator that a lot of people have been paying attention to, so it does suggest that there should be buyers underneath. If we break down below the 50-Day EMA, then it’s likely that we have the 200-Day EMA underneath as a potential target, and therefore we need to pay close attention to that. If we do drop like that, we will probably see a lot of “FOMO” coming into the market. The market breaking down below the 200-Day EMA then opens up a mess flood of selling the could send the Euro back to parity. While I don’t necessarily think that’s going to be the easiest mood to make, I am becoming more and more convinced that it is a real threat at this point.

The alternate scenario of course is that we break above the 1.08 level and go looking to the 1.10 level. The 1.10 level is of course a large, round, psychologically significant figure that a lot of people will be paying close attention to. A break above that could open up the Euro for a bigger move to the upside, perhaps kicking off a longer-term bullish run for the Euro in general. While I don’t necessarily expect to see that, I certainly see how that could be a potential move. Ultimately, this is a market that continues to see a lot of volatility, but eventually we should see that momentum break, and therefore see a bigger move coming. I think in the short term we are looking at range bound trading, and therefore I think you’ve got a situation where short-term trading is probably the norm, so therefore keep that in mind. All things being equal, I still believe that the US dollar is about the flex its muscles, but I will wait for that move.

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