Last week, our technical indicators suggested going Long at or below 1.07250, setting a Stop Loss at 1.06, and going Short at or above 1.07251, setting a Stop Loss at 1.08.

This week, the EURUSD price range was 1.0791 high, set this past Monday, and 1.0724 low, set yesterday, Thursday. So, on Monday, we could have short the currency pair at 1.0790, covering it on an intraday trading at 1.0756, for 0.32% profit. Tuesday, we could have short it at 1.0786, covering it on an intraday trading at 1.0768, for 0.35% profit. Wednesday, we could have short it at 1.0757, covering it on an intraday trading at 1.0735, for 0.2% profit. Thursday, we could have short it at 1.0785, covering it on an intraday trading at 1.0725, for 0.56% profit. Also, On Thursday, we could have bought it at 1.0725, selling it on an intraday trading at 1.0785, for an extra 0.56% ROI.

Fundamental Overview

The resurgence of some bearish sentiment in the US Dollar (USD) sparked a noticeable reaction in EURUSD, sending it to the area of two-day highs around 1.0780 on Thursday.

The Dollar’s retracement also coincided with a broad-based negative session in US yields across different maturities, particularly after investors assessed the higher-than-expected increase in weekly claims while they continued to digest the Federal Reserve’s recent decision to keep interest rates unchanged, along with the probability of the central bank initiating its easing cycle in September.

Regarding the latter point, CME Group’s FedWatch Tool indicated that the probability of lower rates in September rose to around 68%.

The Fed reiterated its readiness to adjust rates while expressing concerns about inflation and potential risks to economic stability. Moreover, the central bank hinted at a slowdown in the pace of balance sheet reduction, with Chair Jerome Powell suggesting that the next policy move is unlikely to involve a rate hike.

Looking ahead, any temporary weakness in the Dollar is expected to be short-lived due to the postponed expectations of a potential Fed interest rate cut later in the year.

Meanwhile, the unchanged monetary policy environment underscores the disparity between the Federal Reserve and other G10 central banks, notably the European Central Bank (ECB).

In relation to the ECB, recent statements from rate setters have hinted at an increasing likelihood of the bank commencing its easing programme in June, although uncertainties persist regarding the ECB’s future decisions beyond the summer. On the latter, de Guindos remarked earlier on Thursday that the ECB is cautious to predict any trend beyond June.

Looking forward, the relatively subdued economic fundamentals in the Eurozone, coupled with the resilience of the US economy, support expectations for a stronger Dollar in the medium term, particularly considering the growing probability of the ECB cutting rates well before the Fed.

With this perspective in mind, the potential for further weakness in EUR/USD should be considered in the medium term.

Technical Analysis

EURUSD nears 1.0800 on broad US Dollar weakness.

Optimism continues to undermine demand for the American currency ahead of the weekly close. EUR/USD hovers around weekly highs just ahead of the 1.0900 figure.

On the upside, EURUSD is expected to encounter first resistance at the May high of 1.0812 (May 3), which precedes the intermediate 100-day SMA of 1.0832 and the April high of 1.0885 (April 9). North of here is the March top of 1.0981 (March 8), ahead of the weekly peak of 1.0998 (January 11), all before the psychological threshold of 1.1000.

Looking south, a break of the 2024 bottom of 1.0601 (April 16) might signal a return to the November 2023 low of 1.0516 (November 1). Once this zone is passed, spot may challenge the weekly low of 1.0495 (October 13, 2023), ahead of the 2023 low of 1.0448 (October 3) and the round milestone of 1.0400.

The above 4-hour chart shows a marked recovery in the pair. Against that, there is an immediate up-barrier at 1.0812, followed by 1.0885. Meanwhile, the 200-SMA at 1.0741 offers initial contention seconded by 1.0723. The relative strength index (RSI) improved past 60.

For the next week, from the following chart, we notice, the currency pair momentum is still bearish, a slowdown around the 1.0750 area for a few hours could drag the pair to recover during the bear market phase. However, it is difficult to last long when approaching the resistance level when the EMA 34.89 technical indicator still favors shorts, because the overall context of the currency pair is still negative. Given this outlook, further weakness in EURUSD can be considered possible in the medium term.

Hence, our technical analysis is suggesting going Long at or below 1.07223, setting a Stop Loss at 1.0640, and going Short at or above 1.075, setting a Stop Loss at 1.08367.

As of 11:06 AM (GMT+1), the EURUSD was trading at 1.07780.

EUR to USD forecast for tomorrow Euro to US Dollar forecast on Friday, May, 10: exchange rate 1.082 US Dollars, maximum 1.098, minimum 1.066. EUR to USD forecast on Monday, May, 13: exchange rate 1.082 US Dollars, maximum 1.098, minimum 1.066. Euro to US Dollar forecast on Tuesday, May, 14: exchange rate 1.080 US Dollars, maximum 1.096, minimum 1.064. EUR to USD forecast on Wednesday, May, 15: exchange rate 1.081 US Dollars, maximum 1.097, minimum 1.065.

In 1 week, Euro to US Dollar forecast on Thursday, May, 16: exchange rate 1.085 US Dollars, maximum 1.101, minimum 1.069. EUR to USD forecast on Friday, May, 17: exchange rate 1.086 US Dollars, maximum 1.102, minimum 1.070. Euro to US Dollar forecast on Monday, May, 20: exchange rate 1.091 US Dollars, maximum 1.107, minimum 1.075. EUR to USD forecast on Tuesday, May, 21: exchange rate 1.086 US Dollars, maximum 1.102, minimum 1.070. Euro to US Dollar forecast on Wednesday, May, 22: exchange rate 1.089 US Dollars, maximum 1.105, minimum 1.073.

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.