By EUR/USD Forecast: Euro Falls into Weekend – 15 August 2022
This is a market that continues to be choppy, but favors the downside.
While inflation is a bit of a problem throughout parts of the EU, the reality is that the Federal Reserve is going to remain very tight and therefore it’s likely that we will continue to see the US dollar strengthen. Ultimately, this is a situation that should continue going forward, especially as we see so much in the way of concern about energy in the European Union going forward. Quite frankly, the market is likely to see this as a “fade the rally” type of situation. It will continue to eventually try to get down to the parity level again, and I think it’s probably only a matter of time before we break below.
The 50-day EMA is a significant resistance barrier, but more important than that is going to be the 1.04 level. Breaking above that level would be a bullish sign, but it’s not until we break above the 1.06 level that I would consider this market broken out to the upside for a bigger move. While I cannot necessarily envision that happening, it’s a matter of following price at that point. If we do break above there, then the market is likely to continue to see the euro bounce quite higher.
The markets are trying to figure out whether or not the Federal Reserve is going to remain tight, which they very well should. However, if inflation starts to drop even further, then it’s possible that we could see the euro be a short-term beneficiary. If we break down below the parity level, it’s likely that the market could go down to the 0.98 level, perhaps even the 0.96 area. Ultimately, this is a market that continues to be choppy, but favors the downside.
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