Forex Forecast: 11 – 15/05/2020
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 initiate a long position on the EURUSD at or below 1.0825, and selling it at or above 1.08588. This week, we had several trading opportunities, mostly on the short side. This Monday, we could have sold the EURUSD at 1.0980, and cover it today, Thursday at 1.0767, realizing a 1.94% ROI. Tuesday, we could have initiated another short position at 1.0927, and closing the position today, at 1.0767, locking in an extra 1.46% gain on the currency pair.
A weaker dollar makes no dent in the EURUSD pair, which remains depressed below 1.0800. The shared currency was undermined by dismal German data, as Industrial Production plunged in March, down by 9.2% in the month and declining 11.6% when compared to a year earlier.
In fact, the pair pierced its previous weekly low ahead of the release of US employment data, which anyway reflected the dismal situation in the sector amid de COVID-19 ongoing crisis.
The number of layoffs reported for US companies in April jumped to 671.129K from 222.288K in March. Initial Jobless Claims for the week ended May 1 resulted in 3.17 million, worse than the 3 million expected.
On a positive note, the preliminary estimate of Q1 Nonfarm Productivity fell by 2.5% from 1.2% in the previous quarter, better than the -5.5% expected. Unit Labor Costs in the same quarter soared to 4.8%, beating expectations.
The EURUSD is trading around 1.08, the lowest in nearly two weeks. German industrial output plunged by 9.2% in March, worse than expected. US jobless claims topped 3 million, while continuing claims are above 22 million, both worse than expected, while concerns about coronavirus persist.
The FX board was unimpressed with the figures, as majors barely move. The EURUSD pair trades in the 1.0790 region, having extended its weekly decline so far to 1.0776.
From a technical point of view and in the short-term, further slides are to be expected.
The 4-hour chart above shows that the 20 SMA extends its sharp decline below the larger ones, a sign of increasing selling interest, while technical indicators remain within negative levels, with modest downward slopes.
The pair needs now to break through 1.0760 to confirm a steeper decline during the upcoming sessions.
Support levels are at 1.0760, 1.0720, and 1.0680, and Resistance levels are at 1.0830, 1.0865, 1.0900.
For next week, our technical indicators suggest initiating a long position at or below 1.07028.
This week, the EURUSD could not break through the strong resistance level of 1.099 and then began to fall. There was a false break of this level, which indicates that the price may drop significantly.
Now EURUSD is near the support line and if the price breaks this line, then EURUSD will most likely reach the bottom line of the falling channel.
Hence, our technical indicators for next week suggest buying EURUSD from the lower line of the falling channel or 1.07028, as indicated in the following chart.
EUR to USD forecast for tomorrow Friday, May, 8: exchange rate 1.0760 Dollars, maximum 1.0921, minimum 1.0599. EUR to USD forecast on Monday, May, 11: exchange rate 1.0699 Dollars, maximum 1.0859, minimum 1.0539. Euro to Dollar forecast on Tuesday, May, 12: exchange rate 1.0622 Dollars, maximum 1.0781, minimum 1.0463. EUR to USD forecast on Wednesday, May, 13: exchange rate 1.0650 Dollars, maximum 1.0810, minimum 1.0490.
In 1 week, Euro to Dollar forecast on Thursday, May, 14: exchange rate 1.0723 Dollars, maximum 1.0884, minimum 1.0562. EUR to USD forecast on Friday, May, 15: exchange rate 1.0776 Dollars, maximum 1.0938, minimum 1.0614. Euro to Dollar forecast on Monday, May, 18: exchange rate 1.0770 Dollars, maximum 1.0932, minimum 1.0608. EUR to USD forecast on Tuesday, May, 19: exchange rate 1.0774 Dollars, maximum 1.0936, minimum 1.0612. Euro to Dollar forecast on Wednesday, May, 20: exchange rate 1.0819 Dollars, maximum 1.0981, minimum 1.0657
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.