Forex Forecast: 15 – 19 November 2021
EURUSD Rates Week in Review
Last week, our technical indicators suggested to gp Long on the currency pair at or below 1.25.
This week, EURUSD price range was 1.1609 high, set this past Tuesday, and 1.1453 low, set today, Thursday. So, Monday, we could have bought the currency pair at 1.1552, selling it on an intraday trading at 1.1593, for 0.35% profit. Tuesday, we could have bought it at 1.1571, selling it on an intraday trading at 1.1607, for 0.31% profit. Wednesday, we could have bought it at 1.1477, selling it on an intraday trading at 1.1594, for 1.02% profit. Thursday, we could have bought it at 1.1455, selling it on an intraday trading at 1.1486, for an extra 0.27% ROI.
EURUSD has suffered heavy losses after the US inflation data triggered a dollar-buying wave but the technical outlook suggests that there could be a technical correction before the next leg down.
Nevertheless, the pair still trades at its lowest level since July 2020 around 1.1470.
The US Bureau of Labor Statistics reported that annual inflation in the US, as measured by the Consumer Price Index (CPI), surged to its highest level since 1990 at 6.2% in October.
With this reading causing markets to price a more-than-70% chance of a Federal Reserve rate hike by June 2022, the greenback outperformed its rivals and the benchmark 10-year US Treasury bond yield gained nearly 8% on a daily basis.
The monetary policy divergence between the European Central Bank (ECB) and the Fed is likely to remain the primary driver of EUR/USD’s action in the near term.
However, euro-zone money markets are now pricing a 10 basis points ECB hike by September, compared to December last week. This development suggests that markets think that the ECB won’t be able to ignore price pressures for long. Unless several ECB policymakers decide to forego the “no hikes in 2022” narrative, EURUSD’s upside could stay limited in the near term.
The US bond markets will be closed due to the Veterans Day holiday this Thursday and the market action is expected to remain subdued.
EURUSD remains pressured below 1.1500, eyeing fresh yearly lows. Hotter US inflation spooks the market while underpins the US dollar. Fed speculation will continue to lead the sentiment amid holiday-thinned trading.
The Relative Strength Index (RSI) indicator on the four-hour chart slumped below 30, pointing to oversold conditions. The last time the RSI fell below 30 in late September, EUR/USD staged a rebound and gained nearly 70 pips in the next two weeks before making a lower low. So, a similar action could be witnessed in the short term.
On the downside, initial support is located at 1.1455 (daily low) ahead of 1.1430 (static level) and 1.1400 (psychological level).
On the other hand, the first recovery target could be seen at 1.1500 (psychological level). A daily close above that level could open the door for additional gains toward 1.1530 (previous support, static level) and 1.1550 (20-period SMA).
For next week, according to our technical analysis illustrated in the following 4-hour chart, it is recommending to Short the currency pair at or above 1.1555, setting a Stop Loss at 1.16, and to go Long at or below 1.15, setting a Stop Loss 1.14.
As of 14:39 PM (GMT), the EURUSD was trading at 1.14633.
EUR to USD forecast for tomorrow: Euro to Dollar forecast on Friday, November, 12: exchange rate 1.1369 Dollars, maximum 1.1540, minimum 1.1198. EUR to USD forecast on Monday, November, 15: exchange rate 1.1375 Dollars, maximum 1.1546, minimum 1.1204. Euro to Dollar forecast on Tuesday, November, 16: exchange rate 1.1398 Dollars, maximum 1.1569, minimum 1.1227. EUR to USD forecast on Wednesday, November, 17: exchange rate 1.1408 Dollars, maximum 1.1579, minimum 1.1237.
In 1 week, Euro to Dollar forecast on Thursday, November, 18: exchange rate 1.1349 Dollars, maximum 1.1519, minimum 1.1179. EUR to USD forecast on Friday, November, 19: exchange rate 1.1380 Dollars, maximum 1.1551, minimum 1.1209. Euro to Dollar forecast on Monday, November, 22: exchange rate 1.1354 Dollars, maximum 1.1524, minimum 1.1184. EUR to USD forecast on Tuesday, November, 23: exchange rate 1.1403 Dollars, maximum 1.1574, minimum 1.1232. Euro to Dollar forecast on Wednesday, November, 24: exchange rate 1.1280 Dollars, maximum 1.1449, minimum 1.1111.
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.