EUR/USD Price Forecast February 8, 2018, Technical Analysis

The EUR/USD pair broke down a bit during the trading session on Tuesday, reaching down towards the 1.2325 level, and more importantly, the 1.23 level. This is an area that has been short-term support, and could cause a bounce, but I would be the first person to mention that we are making “lower highs” on the hourly chart. Ultimately, I believe that the market is going to go looking towards higher levels, but in the meantime it’s obvious that the US dollar is starting to pick up a bit of strength. This can best be seen on the US Dollar Index, as it has reached a significant support level and bounced a bit. Longer-term though, it’s more than likely that we are going to see US dollar weakness.

In the meantime, pay attention to the bond markets, as yields are rising in the United States and that drives up demand for the US dollar. Eventually, that process reverses and then the dollar starts selling off. At this point, I would need to see a move above the 1.24 level to be confident enough to put money to work to the upside, or some type of daily supportive candle. If we do break down from these levels, I suspect that the next major support barrier extends between the 1.20 level on the bottom and the 1.21 level at the top of that range. I expect a lot of buying pressures in that general vicinity, so expect a reasonably quick move to that level, and then longer-term players to get involved.

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