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EUR/USD Forecast: Euro Drops Again on Wednesday

By Christopher Lewis
Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.
  • The euro fell again during the trading session on Wednesday as we are testing the 50-day EMA.
  • This is an indicator that a lot of people will be paying close attention to, and it is also sitting just above a major round figure in the form of 1.10.
  • Ultimately, this is a market that I think is testing the bottom of a larger consolidation area and technically speaking, we haven't formed a double top quite yet, at least not the way I trade because we have not broken to a fresh new swing low.

If we break down below the 1.10 level, then the market could really start to take it off to the downside. On the other hand, it's worth noting that between the 1.10 level and the 1.12 level above, we have consolidation, and the stochastic oscillator is trying to turn around somewhere near the oversold condition. So it'll be interesting to see where this comes into play or if it does at all. Keep in mind that the Federal Reserve recently cut interest rates by 50 basis points in a bit of a shock move.

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Consumer price index in the EU

EUR/USD Forecast Today - 03/10: Euro Drops (Chart)

But what's interesting furthermore is that the consumer price index in Europe has collapsed, meaning that the European Central Bank probably doesn't continue to cut rates. They may have to leave things as they are. If that ends up being the case, that's actually very Euro negative. Furthermore, there are a lot of geopolitical concerns around the world, and it doesn't take a genius to imagine a scenario where the US dollar strengthens as a result. When you look at the longer term charts, it's worth noting that we peaked at a major swing high. Now the question is, will the 1.10 level hold up under scrutiny? At this point in time, that’s the biggest question I have for this pair, and I think it probably tells you everything you need to know.

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Christopher Lewis
About Christopher Lewis
Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.
 

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