EUR/USD Forecast: Screams to the Upside as the Week Closes Out – 07 November 2022

The EUR/USD has rallied rather significantly during the trading session on Friday, as traders have looked at the jobs number and decided that the Federal Reserve was going to lose in monetary policy.This has been a bit of a running gag in the markets, traders come in and pick up risk, only to turn around and fall right back down.I suspect this is probably more of the same, but I would also be remiss if I didn’t recognize that the candlestick is rather large, and therefore it’s likely that there might be a bit of follow-through.

It’s probably worth noting that the parity level sits just above, and that obviously is an area that traders will be paying attention to as it has a lot of psychology attached to it, and we also have the 50-Day EMA in that area as well. Because of this, I think there’s so much noise there that it is only a matter of time before we see exhaustion but clearly this was a shot across the bow to the bearish. It’s not until we break above the 1.02 level that I would take a rally seriously, and even then, I need to see some fundamental differences.

The size of the candlestick is rather impressive, but you should also think about the fact that it happened on a Friday, when liquidity was probably somewhat lacking. The FOMO to the upside has been a uniquely American phenomenon recently, and therefore I think it’s probably worth noting that a lot of the gains were found during the US session.

Nonetheless, we now are set up for a battle at an area that I think is crucial. I will allow this market to do whatever it wants during the day on Monday to give its hand away, so I can see where we are going next. I’m not going to jump in early on Monday, regardless of what happens because the possibility of a false breakout or potential breakdown is very high in this area, so keep that in mind. I still like the US dollar, but the question is will I be able to buy it even cheaper at this point? I don’t know yet, but it certainly looks as if volatility will get worse, not better.

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