Last week, our technical indicators suggested going Short at or above 1.085, setting a Stop Loss at 1.099, and going Long below 1.08, setting a Stop Loss at 1.06.

This week, EURUSD price range was 1.0747 high set this past Tuesday, and 1.0634 low, set yesterday, Wednesday. So, Monday, we could have bought the currency pair at 1.0706, selling it on an intraday trading at 1.0744, for 0.38% profit.  Tuesday, we could have bought it at 1.0673, selling it on an intraday trading at 1.0736, for 0.68% profit. Wednesday, we could have bought it at 1.0635, selling it on an intraday trading at 1.0736, for 0.95% profit. Thursday, we could have bought it at 1.0662, selling it on an intraday trading at 1.0697, for an extra 0.33% ROI.

Fundamental Overview

Softer consumer inflation readings out from France and Germany on Wednesday dented European Central Bank (ECB) rate hike expectations, which, in turn, is seen acting as a headwind for the shared currency. In fact, the headline CPI in France fell from the 6.9% YoY rate to 6.0% in May, missing consensus estimates.

Furthermore, the German CPI also fell short of market expectations and decelerated to the 6.1% YoY rate in May from 7.2% previous, relieving pressure on the ECB to continue raising interest rates.

That said, a slew of ECB officials back the case for additional rate hikes in the coming months. In fact, ECB Vice President, Luis de Guindos noted that victory over inflation is not there yet. Separately, ECB policymaker Madis Muller.

Muller said that core inflation is showing no signs of slowing and it is very likely that the central bank will hike by 25 bps more than once. This comes on the back of comments by ECB Governing Council Gediminas Šimkus on Tuesday, expecting a 25 bps lift-off in June and July. Apart from this, subdued US Dollar (USD) demand – amid diminishing odds for another 25 bps rate hike in June – lends some support to the EURUSD pair and helps limit the downside, at least for the time being.

In fact, Federal Reserve (Fed) Governor Philip Jefferson said in a speech on Wednesday that pausing rate hikes at the next FOMC meeting would offer time to analyse more data before making a decision about the extent of additional tightening. He added that a pause does not mean that rates peaked. Furthermore, Philadelphia Fed President Patrick Harker favoured pausing at the next meeting, though warned that incoming data may change his mind. Apart from this, the recent progress towards averting an unprecedented US debt default, with the US House of Representatives voting in favour of a bill to suspend the debt ceiling late Wednesday, keeps the USD below its highest level since mid-March touched on Wednesday.

That said, worries about a global economic slowdown, particularly in China, and a goodish pickup in the US Treasury bond yields act as a tailwind for the Greenback, capping the upside for the EURUSD pair.

Market participants now look to the release of the flash Eurozone CPI print for a fresh impetus. Later during the early North American session, traders will take cues from the US economic docket, featuring the ADP report on private-sector employment and the ISM Manufacturing PMI. This, along with Fedspeaks, the US bond yields and the broader risk sentiment, will influence the USD price dynamics and contribute to producing some meaningful trading opportunities ahead of the US NFP report on Friday.

Technical Analysis

From a technical perspective, the recent breakdown and acceptance below the 61.8% Fibonacci retracement level of the March-May rally favour bearish traders.

 

 

The Relative Strength Index (RSI) on the daily chart has moved on the verge of breaking into the oversold territory and warrants some caution. This makes it prudent to wait for some near-term consolidation or a modest bounce before positioning for an extension of a nearly one-month-old retracement slide over a one-year higher touched in May.

Nevertheless, the EURUSD pair seems vulnerable to weaken further below the overnight swing low, around the 1.0635 region, and test the 1.0600 round-figure mark. Some follow-through selling should pave the way for deeper losses and drag spot prices to the 1.0570-1.0565 intermediate support. The downward trajectory could get extended further towards the March swing low, just ahead of the 1.0500 psychological mark.

On the flip side, 61.8% Fibo. level, around the 1.0735-1.0740 region, is likely to act as an immediate hurdle, which if cleared might trigger a short-covering move. The EURUSD pair might then climb to the 1.0800 confluence, comprising of the 100-day Simple Moving Average (SMA) and the 50% Fibo. level. The latter should act as a pivotal point. A sustained strength beyond will shift the near-term bias in favour of bullish traders.

 For next week, our technical analysis are suggesting going Short at or above 1.08, setting a Stop Loss at 1.10, and going Long at or below 1.07, setting a Stop Loss at 1.055

As of 11:17 PM (GMT+1), the EURUSD was trading at 1.07026.

 

EUR to USD forecast for tomorrow: Euro to US Dollar forecast on Friday, June, 2: exchange rate 1.065 US Dollars, maximum 1.081, minimum 1.049. EUR to USD forecast on Monday, June, 5: exchange rate 1.067 US Dollars, maximum 1.083, minimum 1.051. Euro to US Dollar forecast on Tuesday, June, 6: exchange rate 1.065 US Dollars, maximum 1.081, minimum 1.049. EUR to USD forecast on Wednesday, June, 7: exchange rate 1.065 US Dollars, maximum 1.081, minimum 1.049.

 

In 1 week, Euro to US Dollar forecast on Thursday, June, 8: exchange rate 1.063 US Dollars, maximum 1.079, minimum 1.047. EUR to USD forecast on Friday, June, 9: exchange rate 1.061 US Dollars, maximum 1.077, minimum 1.045. Euro to US Dollar forecast on Monday, June, 12: exchange rate 1.057 US Dollars, maximum 1.073, minimum 1.041. EUR to USD forecast on Tuesday, June, 13: exchange rate 1.058 US Dollars, maximum 1.074, minimum 1.042. Euro to US Dollar forecast on Wednesday, June, 14: exchange rate 1.061 US Dollars, maximum 1.077, minimum 1.045.

Until next article, wishing all of you wealthy trading!

 

 

Disclosures: The material provided herein is for informational purposes only. It does not constitute an offer to sell or a solicitation of an offer to buy any interests in the EUR/USD or any other securities. This overview may include or be based in part on projections, valuations, estimates and other financial data supplied by third parties, which has not been verified by Pedro Ferreira. Any information regarding projected or estimated investment returns are estimates only and should not be considered indicative of the actual results that may be realized or predictive of the performance of the EUR/USD or any underlying security.  Further, Pedro Ferreira is not long or short in the currency pair. Past investment results of any underlying managers should not be viewed as indicative of future performance of the EUR/USD.

 

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