EUR/USD Forecast: Looking Choppy

• The Euro fell a bit during the trading session on Thursday as the 1.08 level seems to be a little bit much to overcome.
• Nonetheless, as you can see on my chart, there are lines drawn every 100 pips at the big figures and I think the Euro is just simply going to bounce back and forth between them.
• All things being equal, this is a market that I think continues to be very noisy and choppy.

Areas to Watch

I think we have to look at the 1.07 level underneath as significant support, while the 1.09 level above is significant resistance. The 1.08 level is essentially fair value from what I can see right now. This does make a certain amount of sense due to the fact that the European Central Bank recently cut rates. And at the same time, the Federal Reserve, although not cutting rates yet, is starting to see weaker than anticipated announcements coming out of both the CPI and the PPI for the week. The question now is will people run to the dollar not necessarily because they think that the interest rates will stay higher, but perhaps for safety is the global economy starting to slow down that does favor the US dollar before it's all said and done.

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As things stand right now though, I think this remains a fairly neutral candle to look at as it has just simply reiterated the gap from the earlier part of the week at the open. But really at this point in time, not much has changed. We just simply chop back and forth. If you are not trading the euro against the dollar itself, you can use this as perhaps a guide as to how the US dollar might do against other currencies as well.

This is one of my favorite uses for the EUR/USD pair, as it is essentially a proxy for the US Dollar Index if you do not have access to live data for that contract. In general, if this pair starts to fall in favor of the US dollar, you will see the US dollar strengthening in other places. Of course, the exact opposite is also true.

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