The EUR/USD exchange rate dropped below the neckline of $1.10, forming a double top around the early $1.12 range.
Last week, U.S. long-term interest rates increased, leading to more dollar buying, and the euro fell to $1.0901.
This week, the European Central Bank (ECB) meeting is expected to result in a 0.25% interest rate cut. However, the market has not fully priced this in, meaning there could be more room for the euro to fall.
The ECB meeting minutes released last weekend showed concerns about the economy in the Eurozone. It also indicated that inflation is expected to reach the target by the second half of next year.
Compared to the U.S., inflation is slowing more in the Eurozone, and the economic outlook is weaker, keeping the euro in a disadvantageous position.
Even if there is some temporary buying back of the euro, unless it breaks above the $1.10 neckline, further declines are likely.
This week’s EUR/USD forecast range: $1.1000 to $1.0830 (61.8% retracement)
Please note that the above information does not guarantee any profit. Please make your own decisions when trading.