EUR/USD Forecast: Euro Reaching for Big Figure Underneath

Christopher Lewis

I think we have a lot of noise in both directions and it is going to be a bumpy and sideways ride.

The euro has fallen quite a bit during the trading session on Wednesday as we continue to see noise influencing the market. The one point to zero level underneath will be a target that people are reaching for, and the recent spike in interest rates in the United States will continue to cause some issues. I believe that this market has a significant amount of support between the one point to zero level and the 1.19 level, so I am not necessarily willing to jump in and start shorting here. If we break down below the 1.19 level though, I think we will then go looking towards the 200-day EMA and below.

I do believe that there is a significant amount of resistance at the 1.22 handle, which has been very noisy over the last couple of weeks. The 50-day EMA is turning flat, so my best case scenario right now is that we continue to go back and forth in a market that does not really have a catalyst to get going. The market looks as if it is just simply trying to figure out what to do next, so it is probably going to continue to see a lot of volatility, mainly due to the fact that the European Union itself is probably going to start adding stimulus, and we have a lot of questions when it comes to the economy opening up in the EU. It has been a bit of a “rolling blackout” if you will, as one economy locks down while the other one opens back up. As long as that is going to be the case, I believe that the euro will be a bit of an underperformer.

The market will probably move quite a bit based upon the 10-year interest rate in America, so keep that in mind as well. As it rises, it makes the dollar a bit more attractive. I think we have a lot of noise in both directions and it is going to be a bumpy and sideways ride. I do not have strong conviction here, but it certainly looks as if we are hell-bent on pressing back into that support level in the short term.

EUR/USD chart
Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.

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