EUR/USD Forecast: Euro Pulls Back Heading Into the Weekend

I think it’s only a matter time before we break down to the 0.95 handle, possibly even breaking down to a fresh, new low.

  • The EUR/USD currency pair has pulled back a bit during the trading session on Friday to wipe out most of the body of the bullish candlestick from the Thursday session.
  • The Euro continues to have a lot of issues, not the least of which would be that the European Union has to worry about energy this winter.
  • After all, they are already talking about cutting back energy usage by industry which is the last thing you need to see in a place like Germany.

EUR/USD Prediction: Break Down to a New Low Possible

I think it’s only a matter time before we break down to the 0.95 handle, possibly even breaking down to a fresh, new low. If that is going to be the case, then I think we kick off the next leg lower. The situation in Ukraine is not getting any better, and it now appears that the Russians are going to escalate things, which obviously will do no good for the Europeans. Ironically, the Germans were offered gas from Vladimir Putin through NordStream 2 as there is a pipe that is still operational but chose not to take the gas. In other words, the German government is hell-bent on causing a major recession.

Let’s put it this way: the health of the European Union literally depends on how cold this winter is.

Rallies at this point in time will more likely than not continue to see the 50-Day EMA as a ceiling in the market, and the 50-Day EMA sits right around the downtrend line as well. In other words, there are multiple reasons to think that there is technical resistance above. Nonetheless, we would have to break beyond parity to even begin to have the conversation about a potential trend change. The only thing at this point in time that is likely to make the trend changes if for some reason the Federal Reserve determines that it’s time to start listing monetary policy, but it’s almost impossible to do as the inflation in the United States runs over 8% per annum. While the Federal Reserve can cause mass damage in other countries, the US economy is going to take precedence, and that is something that people do not understand. Ultimately, this is a market that I think continues to be a “fade the rally” type of situation going forward.

EUR/USD chart

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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.