EUR/USD Forecast: Euro Continues to Look Relatively Negative

Christopher Lewis

We will continue to see a lot of choppy and negative trading to the downside, as we continue this overall downtrending channel that has been so obvious over the last several weeks.

The euro went back and forth during the trading session on Friday as we limped into the weekend without any real conviction. That being said, the market is likely to continue the overall downtrend that we have seen, and it is worth noting that the US Dollar Index has seen quite a bit of bullish pressure as of late. If we can break above the 93 handle in the US Dollar Index, it is very likely that the EUR/USD pair will start falling as well.

As we close out the week at the 1.18 level, it should be noted that we did actually fall a little lower than that during the week but have bounced a bit since then. This is a market that I think will continue to be a “sell on the rallies” type of situation, as we see the US dollar pick up momentum. It is not necessarily that the euro has fallen apart, it is more like the US dollar is seeing a lot of inflow, especially as we have seen bond yields drop in both the United States and Germany, but it is worth noting that the bond yields in Germany are much lower than the bond yields in the United States, so it is likely that we will continue to see downward pressure. With that being the case, I think it is only a matter of time before we continue to go lower.

To the downside, if we break down below the most recent low, then it is likely that we could go looking towards the 1.17 level, perhaps even down to the 1.16 handle. The 1.16 level underneath is a massive support level that I think a lot of people would pay close attention to, and if we break down below there, then it has the market falling quite rapidly. At this point, the market is likely to go looking to reach towards that area as the area has a bit of a magnetism to it. With this being the case, I think that we will continue to see a lot of choppy and negative trading to the downside, as we continue this overall downtrending channel that has been so obvious over the last several weeks. Furthermore, this is a market that also looks as if it is getting ready to form the so-called “death cross” just above as well.

EUR/USD

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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