Forex Forecast: 14 – 18/12/2020
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 short position at or above 1.20861, setting a stop loss at 1.22. Throughout this week, the EURUSD price range was between 1.2167 and 1.2059. So this past Monday, we could have short the EURUSD on a intraday trading at 1.2165, covering it at 1.2080, realizing 0.7% ROI. Tuesday, we could have short it at 1.2132, covering it on a intraday trading at 1.2097, for 0.29% gain. Wednesday, we could have short it on a intraday trading at 1.2146, covering it at 1.2061, for a 0.7% profit; and today Thursday, we could have short it at 1.2157, closing the short position at 1.2075 for an extra 0.67% ROI.
The pair regained some positive traction on Thursday, snapping three consecutive days of losing streak, and for now, seems to have stalled its recent pullback from a two-and-half-year top. A subdued US dollar price action was seen as one of the key factors that extended some initial support to the EURUSD pair.
The common currency got an additional boost after the European Central Bank (ECB), as was widely expected, decided to leave its benchmark interest rates unchanged at the end of the December meeting. The ECB increased the size of its Pandemic Emergency Purchase Program (PEPP) by €500 billion to a total of €1,850 billion.
In the post-meeting press conference, the ECB President Christine Lagarde said that the increase in PEPP reflects fallout in economic activity and added that the incoming data suggest a more pronounced near-term impact of the pandemic. She reiterated that uncertainty remains high and that the ECB is reading to adjust all instruments as needed.
The dovish comments, however, did little to prompt any selling, instead the emergence of some fresh selling assisted the EURUSD pair to build on its intraday positive move. The greenback met with some fresh supply during the early North American session following the disappointing release of US Initial Weekly Jobless Claims.
In fact, the number of Americans filing for unemployment-related benefits jumped to 853K during the week ending December 5, up sharply from the previous month’s upwardly revised reading of 716K. Separately, the headline US CPI rose 0.2% MoM in November and the yearly rate stayed unchanged at 1.2%, albeit did little to provide any impetus.
EURUSD is rising well above 1.21, responding to fresh stimulus from the ECB and no materially new language on exchange rate concerns. US jobless claims missed estimates while the FDA’s vaccine approval, Brexit and US stimulus talks are eyed.
The buying interest around the shared currency picked up pace in the last hour and pushed the EURUSD pair to fresh session tops, around the 1.2135 region.
With the latest leg up, the EURUSD pair has now climbed to a resistance marked by the top end of a short-term descending trend-channel. The mentioned channel constitutes the formation of a bullish continuation flag chart pattern, which if cleared decisively should set the stage for a further appreciating move for the major.
For next week, as illustrated in the following 4-hour EURUSD chart, our technical analysis indicators suggest an EURUSD uptrend channel. The support pricing line is at 1.200 and resistance line 1.223. However, the currency pair, should start consolidating at the resistance (channel line) 1.2550. Technical indicators are suggestng to go long at or below 1.2124, and short it at or above 1.2550, setting a stop loss at 1.26.
As of 5:44 PM (GMT), the EURUSD was trading at 1.2120.
EUR to USD forecast for tomorrow: Euro to Dollar forecast on Friday, December, 11: exchange rate 1.2064 Dollars, maximum 1.2245, minimum 1.1883. EUR to USD forecast on Monday, December, 14: exchange rate 1.2058 Dollars, maximum 1.2239, minimum 1.1877. Euro to Dollar forecast on Tuesday, December, 15: exchange rate 1.2045 Dollars, maximum 1.2226, minimum 1.1864. EUR to USD forecast on Wednesday, December, 16: exchange rate 1.2021 Dollars, maximum 1.2201, minimum 1.1841.
In 1 week, Euro to Dollar forecast on Thursday, December, 17: exchange rate 1.2049 Dollars, maximum 1.2230, minimum 1.1868. EUR to USD forecast on Friday, December, 18: exchange rate 1.2096 Dollars, maximum 1.2277, minimum 1.1915. Euro to Dollar forecast on Monday, December, 21: exchange rate 1.2239 Dollars, maximum 1.2423, minimum 1.2055. EUR to USD forecast on Tuesday, December, 22: exchange rate 1.2203 Dollars, maximum 1.2386, minimum 1.2020. Euro to Dollar forecast on Wednesday, December, 23: exchange rate 1.2258 Dollars, maximum 1.2442, minimum 1.2074.
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.