EUR/USD Forecast: Breaking Through Support Levels

Christopher Lewis

I do believe that the US dollar is going to continue to strengthen, and the euro will probably be one of the biggest punching bags for the greenback going forward.

The euro continued to slide quite a bit lower during the trading session on Monday as we have broken below the 1.1250 level. This is an area that had initially been a longer-term target of mine, and we got there a bit quicker than I had anticipated. Because of this, the market is likely to see that we are going to go a bit lower, so any time we rally I am looking for an opportunity to short signs of exhaustion.

The 1.14 level above for me is the top of the range, and as long as we can stay down below there, I think it is only a matter of time before we continue to short this market and go even further to the downside. For what it is worth, the 50-day EMA currently sits at the 1.1564 level and is reaching to much lower levels as it is falling off a cliff. Ultimately, this is a market that has a lot to keep in the back of its mind, not the least of which will be the fact that the Federal Reserve is going to be tightening while the European Central Bank will continue to be stuck with very loose monetary policies.

When you look at the chart overall, you can see that we have accelerated to the downside as of late, and it certainly looks as if we are about to see some type of continuation of the downtrend. I believe that we will eventually go looking towards 1.10 level underneath, which makes sense as it is the next large, round, psychologically significant figure. I do not really have a scenario in which I am willing to start buying again, at least not until we break above the 50-day EMA which is basically in the stratosphere at this point, so ultimately this is a “sell the rallies” type of situation that we are continuing to see. Ultimately, I do believe that the US dollar is going to continue to strengthen, and the euro will probably be one of the biggest punching bags for the greenback going forward as the ECB is essentially stuck with not only lower interest rates, but the fact that Germany and Austria both look as if they are ready to shut everything down.

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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