EUR/USD Price Forecast – Euro Bounces Slightly

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Christopher Lewis

Mon, Jul 4, 2022, 5:47 AM 2 min read

Euro vs US Dollar Technical Analysis

The Euro bounced slightly during the trading session on Monday, as the 1.04 level has offered a little bit of dynamic support. That being said, it looks as if it is only a matter of time before this market breaks through that level, and goes looking at much lower levels. On a breakout to the downside, I suspect that this market goes looking to reach the 1.02 level, and then eventually parity. Parity is a real threat by the end of summer, especially as the ECB will almost certainly have to turn around its attitude on trying to tighten, as the European economy has several unique issues that it has to deal with at the same time.

Short-term rallies will continue to offer selling opportunities, reaching all the way up to the 1.06 level in the short term. That’s an area that should continue to be watched, because it could provide an opportunity to “pick up cheap dollars.” Even if we were to break up above there, the 1.08 level looks to be even more resistant, thereby I think it makes for an even better play. It is not until we break above that area that I start to give any Euro rally a serious look. In that scenario, I would have to pay close attention to how the US dollar was behaving against multiple currency, not just the Euro.

Until the Federal Reserve backs down, it seems very unlikely that the US dollar is going to weaken significantly, or for any real amount of time. That remains my thesis, and therefore I continue to fade rallies at the first signs of trouble.