Forex Forecast: 06 – 10/07/2020
How to use the basic technical analysis concepts we have shared with you to predict the next week’s currency pair price movement
EURUSD Rates Week in Review
Last week, our technical indicators suggested to Short the EURUSD in the area of 1.1320 with a stop above 1.1390 and a profit in the area of 1,1260, and Buying in the area of 1.118 with a stop below 1,1140 and a profit in the area of 1,1250. If it breaks on the downside 1.11, it suggests Buying in the area of 1,1090 with a stop below 1,1050 and a profit in the area of 1,1180. Yesterday we could have bought the EURUSD at 1.1185, and sell it today at 1.1303, locking in 1.05% gain.
What cannot go down, must go up! The EURUSD has been rising above the uptrend support line and is moving up amid several positive developments.
Vaccine hopes: Pfizer and BioNTech have reported promising results in their first trial of four COVID-19 vaccines. The two firms said subjects developed antibodies and will proceed with testing of the most successful candidates. Moreover, they are reading the mass production of vaccines, potentially accelerating the deployment of immunization, once it is approved.
Face masks reaching the top? President Donald Trump seemed to have endorsed wearing face masks, saying he would do it and he does it. The U-turn from the Commander-in-Chief, who previously mocked rival Joe Biden for wearing one may help mitigate the disease. Goldman Sachs estimated that face covers could significantly substitute lockdowns and boost Gross Domestic Product by as much as 5%.
It comes as Republican governors and other party members, including Vice President Mike Pence said masks are necessary. A picture is worth a thousand words and an image of Trump wearing a mask, like a “Lone Ranger” as he said, may further boost markets.
Record US COVID-19 cases: The need for protection comes amid yet another record day of US cases, over 50,000. Texas has suffered the highest death rate in six weeks as hospitals in Houston are already above normal capacity. Arizona, Florida, and California are additional hotspots.
Consumers have significantly slowed down their activity even before the new restrictions and places that seem to have the virus under control are either re-closing or delaying the reopening. That includes New York City, the financial capital of the world, where indoor dining remains prohibited.
Investors are currently shrugging off the US COVID-19 situation or in EURUSD’s case, encouraged by Europe’s success in mitigating the disease. The old continent has opened up to visitors from outside the Schengen zone, in another step marking a return to normal.
Euro-zone employment figures for April are set to show a modest increase to 7.7% amid furlough schemes, yet the focus is on America’s jobs report.
Non-Farm Payrolls focus
Due to America’s long Independence Day weekend, the data is out on Thursday instead of Friday. Economists expect the all-important US labor market figures to show an increase of three million in June, following the increase of 2.509 million in May. The recovery comes off low points after America lost around 20 million positions in April.
The Unemployment Rate carries expectations for a drop from 13.3% to 12.3% and is of political importance ahead of the presidential elections due in four months. Investors will also pore onto the participation rate, which surged after crashing in April and the U-6 underemployment or “real unemployment rate”, which is a broader measure of joblessness and stood above 20% in May despite the improvement.
The cautious look
It is essential to note that the Non-Farm Payrolls surveys were taken in the week ending on June 12, before the most recent surge in COVID-19 cases and the consequent lockdowns. ADP’s private-sector jobs report showed an increase of 2.369 million positions, weaker than expected.
The employment component of the ISM Manufacturing Purchasing Managers’ Index remained below 50, indicating contraction, and well below the upbeat headline figure in that survey.
Overall, the market mood is upbeat and an increase in US jobs may keep it that way – pushing stocks higher and the safe-haven dollar lower. However, investors may return to fear about the virus, especially if labour figures miss expectations.
EURUSD accelerates decline and nears 1.1200. The US Nonfarm Payroll report’s effects are long gone. The greenback gets attention as stocks eased sharply from intraday highs, still holding in the green, yet undermined by record coronavirus cases in the US.
The Eurodollar has dipped below the uptrend support line that has been accompanying it for around a month and topped the 50 and 100 Simple Moving Averages on the four-hour chart. Moreover, momentum has turned positive, also supporting the bullish case.
Initial resistance awaits at 1.1290, the weekly high, but the bigger prize is 1.1350, a double-top touched in recent weeks. Further up, 1.1380 and 1.1420 await EURUSD.
Some support awaits at 1.1250, which is where the 50 SMA hits the price. It is followed by the uptrend support line, coming out at around 1.1220, and then by 1.185, a weekly low. The next lines are 1.1165 and 1.1075.
For next week, our technical indicators suggest to Short the EURUSD at or above 1.1348, and to go long on the currency pair between 1.1228 and 1.1174, as the following chart illustrates.
EUR to USD forecast for tomorrow, Euro to Dollar forecast on Friday, July, 3: exchange rate 1.1274 Dollars, maximum 1.1443, minimum 1.1105. EUR to USD forecast on Monday, July, 6: exchange rate 1.1260 Dollars, maximum 1.1429, minimum 1.1091. Euro to Dollar forecast on Tuesday, July, 7: exchange rate 1.1289 Dollars, maximum 1.1458, minimum 1.1120. EUR to USD forecast on Wednesday, July, 8: exchange rate 1.1289 Dollars, maximum 1.1458, minimum 1.1120.
In 1 week, Euro to Dollar forecast on Thursday, July, 9: exchange rate 1.1250 Dollars, maximum 1.1419, minimum 1.1081. EUR to USD forecast on Friday, July, 10: exchange rate 1.1198 Dollars, maximum 1.1366, minimum 1.1030. Euro to Dollar forecast on Monday, July, 13: exchange rate 1.1244 Dollars, maximum 1.1413, minimum 1.1075. EUR to USD forecast on Tuesday, July, 14: exchange rate 1.1328 Dollars, maximum 1.1498, minimum 1.1158. Euro to Dollar forecast on Wednesday, July, 15: exchange rate 1.1302 Dollars, maximum 1.1472, minimum 1.1132.
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 nor Keysoft. 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 the future performance of the EUR/USD.