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EUR/USD Remains Extremely Vulnerable In Muted Week – EUR/USD Market Analysis Forecast

  • 3 mins read ●
  • Published:
eur usd 2

Key Points

  • Traders eye some high-impact events to end the week. 
  • BRICS prepare for dollar collapse.
  • DXY continues its technical grind higher. 
  • Is support coming soon for EURUSD?

Key Events

It is no secret that this week has been relatively muted from a fundamental point of view. There have been rumbles from some Fed members, but other than that, headlines have been hard to come by. However, should there be any volatility at the end of the week for EURUSD, expect it to come from the following two events. 

Traders will get their weekly view of US Unemployment Claims, which have been steady at around 210,000 for quite some time. This is regarded as high impact, but often, the effect of this event is shortlived and one for the scalpers. A figure above 230,000 is likely to cause a wave of dollar selling, and the bulls will look for a figure below 200,000.

On Friday, The University of Michigan Consumer Sentiment Index is due out, and this will give traders an idea of US consumers’ financial confidence. The figure has improved since January; however, with inflation remaining robust, we could see a weaker reading here, which could temporarily pressure the dollar.

Visit our Economic Calendar

Can The Dollar Really Collapse?

A world where the US dollar could collapse seems a long way away for most people, but not for the BRICS nations. The story of the BRICS nations developing a substitute currency for the US dollar has been bubbling under the surface for some time. On Friday, the Russian IMF representative Alexey Mozhin said that the “shortcomings of the current financial system are becoming more apparent.” This has brought this story back to the surface and is one to keep an eye on if it develops.

DXY Continues Technical Grind Higher

As for the US Dollar Index (DXY), the grind higher is clear to see on the hourly time frame. A bullish flag was created earlier in the week, and this morning, we are breaking out of it.

dxy 1h chart
US Dollar Index (DXY) 1H Chart – 09/05/2024

The main concern with the current dollar rally is the low volume. There isn’t much volume in the candles due to the quiet nature of the week, and the price is about to run into an hourly order block at 105.740. Could this be a strong area of resistance heading into the end of the week?

EURUSD Remains Vulnerable For Now

The situation for EURUSD remains vulnerable. Although there has been a solid rebound from the lows created at the beginning of the month, we are now in retracement territory.

eurusd 1h chart
EUR/USD 1H Chart – 09/05/2024

The next support area for this market is 1.06900, about 40 pips from the current price. This would also fill the Fair Value Gap (FVG) in the orange box. From here, the bulls may step in, and this could coincide nicely with the DXY H1 bearish order block. Eyes on! 

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Risk Disclosure: The information provided in this article is not intended to give financial advice, recommend investments, guarantee profits, or shield you from losses. Our content is only for informational purposes and to help you understand the risks and complexity of these markets by providing objective analysis. Before trading, carefully consider your experience, financial goals, and risk tolerance. Trading involves significant potential for financial loss and isn't suitable for everyone.

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