Forex Forecast: 12 – 16 September 2022
EURUSD Rates Week in Review
Last week, our technical indicators suggested to Buy the currency pair at or below 1.01, setting a Stop Loss at 0.99, and Shorting it above 1.01, setting a Stop Loss at 1.0179.
This week, EURUSD price range was 1.0017 high, set today, Thursday, and 0.9863 low, set this past Tuesday. So, Monday, we could have Bought the currency pair at 0.99, selling it on an intraday trading at 0.9948, for 0.48% profit. Tuesday, we could have Bought it at 0.99, selling it on an intraday trading at 0.9985, for 0.86% profit. Wednesday, we could have Bought the currency pair at 0.99, selling it on an intraday trading at 1.001, for 1.11% profit. Thursday, we could have Bought the currency pair at 0.9979, selling it on an intraday trading at 1.0015, for an extra 0.36% ROI.
Fundamental Overview
EURUSD has gone into a consolidation phase below parity early Thursday after having registered strong recovery gains on Wednesday. Ahead of the European Central Bank’s (ECB) highly-anticipated monetary policy announcements, the near-term technical outlook suggests that sellers remain on the sidelines for the time being.
The ECB is expected to raise rates by 75 basis points (bps). However, some economists think that the bank could hike rates by 50 bps instead given the uncertainties surrounding the outlook.
Investors grow increasingly concerned about the European economy tipping into a long-lasting recession. The deepening energy crisis with Russia deliberately cutting gas supplies to Europe could continue to fuel inflation and cause households’ disposable income to diminish further.
In case the ECB hikes rates by 75 bps, the initial reaction could help the shared currency find demand. However, the positive impact of such a policy move on the euro could remain short-lived if the bank projects a recession in later 2022 or early 2023. That would likely suggest a cautious approach to policy normalization moving forward and not allow EURUSD to gather bullish momentum.
On the other hand, a 50 bps rate hike should trigger a euro selloff and force EUR/USD to push lower toward new multi-decade highs.
The bank’s inflation projections and ECB President Christine Lagarde on the energy crisis will also be scrutinized by investors.
Technical Analysis
EURUSD is trading in a relatively narrow channel at around 1.0000 on Thursday as investors stay on the sidelines while awaiting the European Central Bank’s policy announcements. FOMC Chairman Jerome Powell is scheduled to deliver a speech later in the day.
The near-term technical picture points to a bullish tilt with the Relative Strength Index (RSI) indicator on the four-hour chart holding comfortably above 50. Additionally, EUR/USD closed the last four four-hour candles above the 20-period and 50-period SMAs. Finally, the pair trades above the 10-day-old descending trendline.
On the upside, 1.0000 (100-period SMA, psychological level) forms key resistance. In case this level is confirmed as support on a hawkish ECB outlook, the pair could target 1.0060 (static level) and 1.0100 (psychological level, 200-period SMA).
Supports are located at 0.9970 (50-period SMA), 0.9940 (broken trend line, 20-period SMA) and 0.9900 (psychological level).
For next week, EURUSD price is struggling in the 0.99 Area. As we can see in the following chart, the trend is strongly bearish , the pattern recognized is the Bearish Flag, and we are looking for the price to reach 0.98 before dropping more. The RSI is Bearish and the price is still under the major moving averages.
The following technical analysis chart is suggesting to Buy the currency pair at or below 1.0017, setting a Stop Loss at 0.98, and Shorting it above 1.0017, setting a Stop Loss at 1.0179.
If the ECB rates by 0.75 basis point, the EURUSD may go higher in the very short-term, before resuming its downtrend below parity.
As of 1:23 PM (GMT+1), the EURUSD was trading at 1.00045.
EUR to USD forecast for tomorrow: Euro to Dollar forecast on Friday, September, 9: exchange rate 1.0120 Dollars, maximum 1.0272, minimum 0.9968. EUR to USD forecast on Monday, September, 12: exchange rate 1.0091 Dollars, maximum 1.0242, minimum 0.9940. Euro to Dollar forecast on Tuesday, September, 13: exchange rate 1.0070 Dollars, maximum 1.0221, minimum 0.9919. EUR to USD forecast on Wednesday, September, 14: exchange rate 1.0077 Dollars, maximum 1.0228, minimum 0.9926.
In 1 week, Euro to Dollar forecast on Thursday, September, 15: exchange rate 0.9969 Dollars, maximum 1.0119, minimum 0.9819. EUR to USD forecast on Friday, September, 16: exchange rate 1.0007 Dollars, maximum 1.0157, minimum 0.9857. Euro to Dollar forecast on Monday, September, 19: exchange rate 1.0022 Dollars, maximum 1.0172, minimum 0.9872. EUR to USD forecast on Tuesday, September, 20: exchange rate 1.0051 Dollars, maximum 1.0202, minimum 0.9900. Euro to Dollar forecast on Wednesday, September, 21: exchange rate 1.0048 Dollars, maximum 1.0199, minimum 0.9897.
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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