Forex Forecast: 17 – 21 January 2022

 

EURUSD Rates Week in Review

Last week, our technical indicators suggested to go Long on the currency pair at or below 1.1330, setting a Stop loss at 1.1185, and go Short at or above 1.1410, setting a Stop loss at 1.15.

This week, EURUSD price range was 1.1479 high, set today, Thursday, and 1.1285 low set this past Monday. So, Monday, we could have bought the EURUSD at 1.1287, selling it on an intraday trading at 1.1360, for 0.68% profit. Tuesday, we could have bought it at 1.1315, selling it on an intraday trading at 1.1373, for 0.51% profit. Wednesday, we could have short it the currency pair at 1.1451, Covering it on an intraday trading at 1.1357, for 0.82% profit.   Today, Thursday, we could have short it the currency pair at 1.1477, Covering it on an intraday trading at 1.1438, for an extra 034% ROI.

 Fundamental Overview

The EURUSD pair peaked at 1.1479 today, Thursday, as the dollar’s selloff persisted through the first half of the day. The greenback plummeted following the release of US inflation figures, as the annual Consumer Price Index reached 7% YoY in December. The Federal Reserve’s hawkishness was pretty much priced in ahead of the release, with three rate hikes anticipated for this year and chances of a balance sheet runoff before the year-end, resulting in the report triggering the opposite-than-usual reaction to skyrocketing prices pressure.

Wall Street closed Wednesday with gains, although the DJIA struggled to stay in the green. Asian and European indexes trade mixed, suggesting that the risk-on rally is losing steam.  At the same time, US government bond yields ticked higher, with that on the 10-year Treasury note recovering from 1.71% to the current 1.74%.

Data wise, the EU macroeconomic calendar had nothing to offer, although European Central Bank Vice President Luis de Guindos said the European economy is getting used to the coronavirus,  adding that “perhaps inflation won’t be as transitory as forecast only some months ago,” although he expects it to stay below the ECB’s target in 2023 and 2024.

The US published Initial Jobless Claims for the week ended January 7, which came in worse than anticipated, increasing to 230K. The December Producer Price Index in the country rose 8.3% YoY, higher than anticipated.

Technical Analysis

EURUSD holds above 1.1450 after US data, as the greenback struggles to find demand after US data. The annual PPI edged higher to 9.7% in December and the weekly Initial Jobless Claims rose to 230,000 from 207,000.

 

The EURUSD pair is comfortable trading above the 50% retracement of the 1.1691/1.1185 decline at 1.1437, an immediate support level. The pair maintains its bullish potential in the daily chart, although it should face strong resistance around 1.1500, as the 61.8% retracement of the mentioned slump stands at 1.1495 while a mildly bearish 100 SMA stands at around 1.1510. Nevertheless, EUR/USD keeps advancing above its 20 SMA, as technical indicators keep heading north near overbought readings.

The pair is overbought in the near term, although given that it is holding near the daily high, chances of a bearish corrective slide are limited. The 4-hour chart shows that technical indicators hold within extreme levels although turning marginally lower. The 20 SMA heads firmly higher, converging with Fibonacci support at 1.1385, a line in the sand for bulls.

Support levels are at 1.1435, 1.1385, and 1.1345.

Resistance levels are at 1.1470, 1.1510, and 1.1550.

For next week, according to the following two hour chart, the currency pair should start getting selling pressure above 1.1479. So, we would go Short at or above 1.14, setting a Stop loss at 1.1525, and go Long at or below 1.1320, setting a Stop loss at 1.1995.

 

As of 2:43 PM (GMT), the EURUSD was trading at 1.14765.

 

EUR to USD forecast for tomorrow: Euro to Dollar forecast on Friday, January, 14: exchange rate 1.1524 Dollars, maximum 1.1697, minimum 1.1351. EUR to USD forecast on Monday, January, 17: exchange rate 1.1566 Dollars, maximum 1.1739, minimum 1.1393. Euro to Dollar forecast on Tuesday, January, 18: exchange rate 1.1530 Dollars, maximum 1.1703, minimum 1.1357. EUR to USD forecast on Wednesday, January, 19: exchange rate 1.1595 Dollars, maximum 1.1769, minimum 1.1421.

 

In 1 week, Euro to Dollar forecast on Thursday, January, 20: exchange rate 1.1580 Dollars, maximum 1.1754, minimum 1.1406. EUR to USD forecast on Friday, January, 21: exchange rate 1.1608 Dollars, maximum 1.1782, minimum 1.1434. Euro to Dollar forecast on Monday, January, 24: exchange rate 1.1596 Dollars, maximum 1.1770, minimum 1.1422. EUR to USD forecast on Tuesday, January, 25: exchange rate 1.1523 Dollars, maximum 1.1696, minimum 1.1350. Euro to Dollar forecast on Wednesday, January, 26: exchange rate 1.1566 Dollars, maximum 1.1739, minimum 1.1393.

 

 

 

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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