Where Next For EUR/USD?

Will the Euro outperform the American dollar in Q1, 2023?

The Euro has been overperforming against most of the 8 major currencies traded in the Foreign Exchange Market (Forex) for the Q4 of 2022. Will this trend continue or will economic and technical data from Q1 2023 lead to the fall of the Euro.? Let’s dive in into the possible projections of the most traded pair, EUR/USD, to have a better understanding.


The EUR/USD pair will have an overall uptrend projection in Q1 of 2023. If the tone of the European economic data for Q1 2023 depicts a hawkish tone along with certain technical analysis tools such as ;

  • Overlays (moving averages, Bollinger bands, and Fibonacci line)
  • Oscillators (Stochastic oscillator, MACD, and RSI)

These technical can be used in tandem when analyzing the EUR/USD pair in forex to predict whether the overall trend of EUR/USD will be an uptrend.

From the image of EUR/USD for Q4 2022 above. If the market breaks clearly below the Upward trend line from Q4 and retests it, that will indicate the start of an uptrend. But we need to confirm this move (uptrend) by also observing when the “blue” line of the RSI stochastic crosses the “red line” from below. When both scenarios occur, the overall projection for EUR/USD in most part Q1 2023 will be an Uptrend.

Is Downtrend Possible?

Before Q1 2023 the EUR/USD pair have been in an overall uptrend from the end of the third quarter (Q3) of 2022 through the end of the fourth quarter (Q4) of 2022 due to bearish economic indicators for the US economy such as: Negative Core PCE Price Index m/m results, and negative ISM Manufacturing PMI results which are strong economic indicators for the dollar.

If the economic indicators and technical indicators continue to favor the dollar, we will see the pair EUR/USD and other corresponding pair reverses to the downtrend. A simple analysis of the downtrend of EUR/USD in Q1 of 2023

If the market fails to break clearly below the upward moving average from Q4 2022, that will indicate the reversal of an existing uptrend. To confirm the reversal of the upward trend, also observe if the “blue” line of the RSI stochastic crosses the “red line” from above. When both scenarios occur, the overall projection for EUR/USD in most of Q1 2023 will be a downtrend.

The overall EUR/USD pair projections for 2023 in Q1 are dependent on both economic tools/indicators and technical tools. Therefore, both tools should be carefully considered when analyzing EUR/USD pairs in Forex 2023.

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