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EUR/USD Forecast: Price Gives Up Early Gains – 20 June 2022

As things stand right now, there’s not much out there that should lift the euro, other than the occasional bear market rally.

The euro pulled back a bit from the initial attempt to rally on Friday, as we continue to see US dollar strength overall. Ultimately, this is a market that’s been in a downturn for a while and had even recently pulled back from the 50-day EMA. This is an indicator that has been rather reliable in this pair for a while, so it’s not a huge surprise to find that the downtrend is continuing to bed.

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However, you should keep an eye on the 1.04 level underneath as we had recently for the little bit of a “double bottom” in that region. Breaking down below that would be extraordinarily negative and could send the euro crashing. At that point, I would anticipate that the euro goes to the 1.02 level, followed by the parity level, which I do think could happen sometime this summer.

The ECB, which recently had changed its tune to a more hawkish stance, has had a recent emergency meeting that suggests they are concerned about Italian bonds. In other words, they are starting to sound dovish again, which is exactly what got the euro into this mess to begin with. I have no interest in trying to buy this pair anytime soon, unless we can break above the crucial 1.08 level, which would at least show that the double bottom has further to go as far as the potential “measured move” would be concerned. If we do break that level, then the move should be to the 1.12 level, another crucial area on the chart.

This is a pair that will more likely than not offer plenty of selling opportunities, at the first signs of exhaustion. That’s how I’m going to be playing this market, because I have no interest in trying to fight the trend, and I do recognize that the Federal Reserve is essentially stuck in so much as having to remain tight as they fight massive amounts of inflation in the United States. With this being the case, the pair should continue to drift lower over the longer term. In fact, as things stand right now, there’s not much out there that should lift the euro, other than the occasional bear market rally.

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