EUR/USD Forecast:Continues to Bounce Around the Parity Level

Even if we do rally from here, then it’s likely that we will see an opportunity to short this market again, especially as the US dollar has been like a wrecking ball against almost everything. 

The EUR/USD has gone back and forth during trading on Monday, as we continue to see the parity level attract a lot of attention. It’s worth noting that the market is simply chopping around, and it’s not doing anything right now. That does make a certain amount of sense that we are going to continue to see a lot of confusion around this area, just simply because there’s a lot of psychology attached to the idea of parity.

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The US dollar will continue to be stronger than the Euro in general since the European Union has a whole host of issues that the United States does not have to deal with. The first one of course is going to be energy and the fact that it may be running out of energy. At this point, there are a lot of concerns about the EU energy supply this winter, and there does not seem to be anything out there changing the outlook for Europe. Because of this, the economic outlook for Europe must be thought of as poor at best.

Dollar Backed by Federal Reserve

• The US dollar is backed by a very hawkish central bank, one that is willing to fight inflation. In other words, interest rates are going up in America and that typically does help the currency.
• Beyond that, we also must look at this through the prism of simple momentum.
• The Euro has been falling for ages, and it does take quite some time to turn the entire trend around.

Even if we do rally from here, then it’s likely that we will see an opportunity to short this market again, especially as the US dollar has been like a wrecking ball against almost everything. The 50 Day EMA sits just above the 1.02 level, and I think then continues to be an area that people will pay close attention to. After that, the market then starts to focus on the will .04 level, an area that has been important a couple of times in the past, as it had previously been supported. “Market memory” could come into the picture and offer a certain amount of resistance selling. Either way, I don’t have an interest in buying the Euro anytime soon, and therefore I’m just looking to pick up the US dollar “on the cheap.”

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