EUR/USD Forecast Today - 02/10: Euro Plunges (Chart)
Date
10/2/2024 2:42:18 PM
(MENAFN- Daily Forex)
During my daily analysis of major currency pairs, the Euro stands out as it has plunged quite drastically. While you could have made an argument that the 1.12 level is a major barrier and it should not be a huge surprise that we have pulled back from there, the reality is that the CPI numbers coming out at 1.8% year-over-year instead of the target rate of 2.0% that the European Central bank is typically aiming for. In other words, a lot of traders started to think that perhaps the European Central Bank will have to keep monetary policy a bit looser than anticipated, as the idea is that perhaps inflation and economic growth is struggling on the continent.
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Looking at the technical Analysis, it's worth noting that we did form a bit of a“double top” at the 1.12 level, and of course we also had seen a bit of divergence at the Moving Average Convergence Divergence indicator of the last several sessions, so it makes a certain amount of sense that we would see the 1.12 level offer a bit of a ceiling. Furthermore, you can also make an argument that the 50 Day EMA is worth watching, as it is an area that we have bounced from later in the session, and of course it is an indicator that a lot of traders will pay close attention to.
Underneath all of that, the 1.10 level is a large, round, psychologically significant figure, and an area that has a certain amount of“market memory” attached to it, as it had previously been resistance. In other words, I think there are most certainly going to be buyers underneath, and I think it's probably only a matter of time before we do bounce and rally. However, this doesn't mean that we have to do so, nor does it mean that it's necessarily a clear-cut case.
If we were to break down below the 1.10 level, then it's likely that the market really starts to fall apart, and that probably ushers in a new“flight to safety” type of trade around the world, not just in this market. As things stand right now though, I think we have a long way to go before that actually happens.
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