Forex Forecast: 17 – 21/08/2020
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 shorting the currency pair at 1.19, with a stop loss of 1.22. Right after writing last week article, August 6, we could have shorted the EURUSD at 1.19 and 1.1917, closing the position yesterday, Wednesday at 1.1710, realizing 1.6% and 1.74% profit, respectively.
The emergence of some fresh selling around the US dollar assisted the EUR/USD pair to reverse an early dip to the 1.1700 neighbourhood and refresh weekly tops on Wednesday. Reviving hopes of the US economic recovery extended some initial support to the greenback and dragged the pair to over one-week lows. However, the deadlock in the US Congress over additional COVID-19 stimulus package held investors from placing aggressive USD bullish bets, rather prompted some fresh selling at higher levels.
The USD failed to gain any respite following the release of hotter-than-expected US consumer inflation figures. In fact, the headline CPI rose 0.6% MoM in July as against consensus estimates pointing to a 0.3% increase. Annually, the CPI accelerated back to 1.0% from the 0.6% previous. Meanwhile, core CPI picked up to 0.6% and 1.6% on a monthly and yearly basis, respectively, both beating expectations. The pair rallied over 100 pips from daily swing lows and held steady above the 1.1800 mark through the Asian session on Thursday.
Given the uncertainty over additional stimulus to support the economic recovery from the coronavirus pandemic, a fresh leg down in the US Treasury bond yields kept the USD bulls on the defensive. This, in turn, was seen as one of the key factors behind the pair’s modest uptick for the second consecutive session on Thursday.
Market participants now look forward to the final German CPI print for some impetus. Later during the early North American session, the release of the US Initial Weekly Jobless Claims might influence the USD price dynamics and further contribute to producing some meaningful trading opportunities.
EURUSD has finally retreated as expected from its highs and after encouraging US jobless claims, the EURUSD was trading above 1.18, but off the highs. Initial US jobless claims fall below one million for the first time since the pandemic. Continuing claims also beat estimates.
From a technical perspective, any subsequent positive move is likely to confront some resistance near the 1.1840 level. Some follow-through buying has the potential to lift the pair back to the double-top resistance, around the 1.1900-1.1910 region.
A convincing breakthrough will be seen as a fresh trigger for bullish traders and set the stage for a move towards reclaiming the key 1.2000 psychological mark with some intermediate resistance near the 1.1975-80 region.
On the flip side, immediate support is pegged near the 1.1740-35 region. This is followed by the 1.1700 mark, which marks the neckline support of the double-top pattern. Sustained weakness below will confirm a near-term bearish breakdown and accelerate the fall towards the 1.1625-20 support area.
Subsequent fall below the 1.1600 mark will set the stage for an extension of the corrective slide towards testing the next major support near the 1.1550-40 region, marking the 50% Fibonacci level of the 1.1168-1.1916 rally.
Resistances, from the current level, come at 1.1830 and 1.1915, with a break above this last exposing the 1.2000 threshold.
For next week and as shown in the following EURUSD daily chart, our technical indicators
suggest to go long on the currency pair at 1.18 with a target selling price at 1.1860, and short it at or above 1.1880, with 1.20 stop loss. Most likely and throughout next week, the EUR USD should be consolidating between 1.18600 and 1.1800. As of 6:52 PM (GMT+1), the EURUSD was trading at 1.1871.
EUR to USD forecast for tomorrow, Euro to Dollar forecast on Friday, August, 14: exchange rate 1.1852 Dollars, maximum 1.2030, minimum 1.1674. EUR to USD forecast on Monday, August, 17: exchange rate 1.1873 Dollars, maximum 1.2051, minimum 1.1695. Euro to Dollar forecast on Tuesday, August, 18: exchange rate 1.1895 Dollars, maximum 1.2073, minimum 1.1717. EUR to USD forecast on Wednesday, August, 19: exchange rate 1.1876 Dollars, maximum 1.2054, minimum 1.1698.
In 1 week, Euro to Dollar forecast on Thursday, August, 20: exchange rate 1.1764 Dollars, maximum 1.1940, minimum 1.1588. EUR to USD forecast on Friday, August, 21: exchange rate 1.1771 Dollars, maximum 1.1948, minimum 1.1594. Euro to Dollar forecast on Monday, August, 24: exchange rate 1.1867 Dollars, maximum 1.2045, minimum 1.1689. EUR to USD forecast on Tuesday, August, 25: exchange rate 1.1898 Dollars, maximum 1.2076, minimum 1.1720. Euro to Dollar forecast on Wednesday, August, 26: exchange rate 1.1852 Dollars, maximum 1.2030, minimum 1.1674.
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.