EUR/USD Forecast: Leaves Parity Behind – 23 August 2022
It’s likely that we continue to see more downward pressure than up, so I have absolutely no interest in buying this pair anytime soon.
The EUR/USD has broken through parity again during the trading session on Monday and has now left the parity level behind. In fact, it looks like the Euro is going to try to go down to the $0.99 level, and beyond. I have been saying for a while that if we give up parity, it’s very likely that the first target will be the $0.98 level, and there’s nothing on this chart that remotely suggests that we are not going to at least try to get down there.
Rallies at this point will be probably best thought of as the market offering “cheap US dollars”.We will be looking for signs of exhaustion after short-term rallies that I can start shorting again. This pair is extraordinarily choppy, but it does tend to move very slowly overall.
In that scenario, you may need a day or 2 of bullish pressure to bring back the sellers. However, we could also break down below the bottom of the candlestick for the session on Monday, opening up a flood of fresh selling. At that point, the Euro is going to go looking into the $0.99 level.
Rallies at this point will be looked at with suspicion, even if we can break above the parity level. At that point, the $1.01 level, the $1.02 level, and the 50 Day EMA all offer potential resistance barriers as well. Because of this, the market will almost certainly have to pay close attention to signs of the markets selling off and look at them as an opportunity to pick up “cheap US dollars.” That of course is what you’re hoping for, the opportunity to short at higher levels in what is a strong and reliable downtrend.
The Europeans have a mess on their hands, as energy is not necessarily guaranteed to the continent this winter, and that has put on quite a bit of pressure when it comes to the manufacturing sector, as natural gas may have to be rationed. In that scenario, it’s obvious that the economy would slow down quite drastically, forcing the ECB to be extraordinarily loose with its monetary policy. As things stand right now, it’s likely that we continue to see more downward pressure than up, so I have absolutely no interest in buying this pair anytime soon.
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