- The EUR/USD experienced a slight drift lower during Monday's trading session, with its proximity to the 200-Day EMA capturing the attention of market participants.
- However, if the market were to break below last week's lows, it is highly likely that the euro could descend to the 1.05 level. This level holds psychological significance as a large, round figure and has previously acted as a bounce point.
- A breach below this level could potentially usher in a shift in the market dynamics.
On the other hand, in the case of short-term bounces, a rise toward the 1.0775 level, from which the market pulled back last week, is a plausible scenario. Should the market manage to surpass this level, the focus will turn toward the 50-Day EMA as a potential target. It is important to note that the 50-Day EMA may offer resistance, potentially limiting the extent of short-term rallies. Achieving levels above the 50-Day EMA would require a significant amount of momentum, signaling a bullish outlook. However, such a scenario appears challenging to materialize at present.
Over the next couple of weeks, it is likely that the euro will exhibit back-and-forth price action and display signs of volatility. The market may manifest noise and turbulence, prompting a period of waiting for clarity. Key events on the horizon are the interest rate decisions by the Federal Reserve on June 14 and the European Central Bank on June 15. These events will likely provide further insights and shape market sentiment. It is worth noting that various factors within Europe, including Germany's entry into a recession, may exert pressure on the European Central Bank, potentially leading to a slowdown in its actions. Against this backdrop, the US dollar is expected to regain strength, particularly if there are negative economic developments. Consequently, a bearish outlook prevails, although it is important to acknowledge the potential for short-term sideways movement.
I’m Bearish on the Euro
Ultimately, the euro faces uncertainty as it encounters crucial levels and awaits key events on the horizon. The market's proximity to the 200-Day EMA captures attention, while the potential for a descent toward the 1.05 level looms. Short-term bounces may encounter resistance around the 1.0775 level, with the 50-Day EMA posing a further hurdle. The coming weeks are likely to witness back-and-forth price action and heightened volatility, as market participants seek clarity from upcoming interest rate decisions.
Potential signal: I am fundamentally bearish on the Euro, and the next week could be a big tell. If the EUR/USD pair breaks below the 1.0650 level, I am selling. I will have a 80 pip stop loss, and aim for at least 1.0510 below.
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