EUR/USD Forecast Video for 01-02-2024

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Euro vs US Dollar Technical Analysis

The euro initially fell a bit during the trading session on Wednesday, testing the 200-day EMA as we wait for the FOMC. All things being equal, this is a market that continues to see a lot of noisy behavior between the 200-day EMA and the 50-day EMA indicators. Ultimately, the market is waiting for some type of decision and the press conference statement coming from Jerome Powell to give it the next signal. All things being equal, if we break down below the 200-day EMA, the 1.0750 level underneath should be supported.

If we break higher, the 50-day EMA could also be a resistance barrier. The market will more likely than not break above there and go looking to the 1.10 level. That’s an area that has been important more than once, and an area that I think will continue to be watched very closely. With this being the case, the market would almost certainly have a major reaction to an attempt to break above there.

I don’t know if we are going to break out of this area, but all things being equal, this is a market that I think just doesn’t really know what to do with itself. And this year could be very choppy and sideways in general. We already know that the Federal Reserve will likely cut rates in 2024, but what will the ECB do? I suspect that the ECB will have to start thinking about loosening monetary policy as well with Germany entering a recession.

Quite frankly, Europe is in a very tenuous set of circumstances right now, and it’s difficult to imagine that the ECB stays hawkish throughout the entire year, and I think that’s part of what the market is trying to sort out here. That being said, I think short-term rallies are more likely than not going to be selling opportunities, but I think we stay within this box. If Jerome Powell shocks the market, that could change things. But as things stand right now, that’s the analysis, and that’s the most likely path forward.

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