Forex Forecast: 18 – 22/05/2020
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 initiating a long position on the EURUSD at or below at or below 1.07028. This week the EURUSD high was 1.0897 and the low 1.0775. As of 3:54 PM (GMT+1), the EURUSD was trading at 1.0808. Hence, throughout this week there was very little opportunity for longs and shorts to profit on this currency pair.
EURUSD has extended its falls to the lowest in a week, well below 1.08, after President Trump supported a strong dollar. The primary drive is Fed Chair Powell’s rejection of negative rates. US jobless claims rose by 2.981 million, worse than expected.
The EURUSD pair is under selling pressure this Tuesday, trading below the 1.0800 level. The American dollar remains stronger against most of its major rivals, underpinned by words from US Federal Reserve’s head, Powell, who dismissed chances of going into negative rates. The greenback is also up amid its safe-haven condition, as worldwide equities trade in the red while government bond yields ease. Meanwhile, US President Trump said that “it’s a great time to have a strong US Dollar.”
Germany published its April inflation figures, with the monthly CPI rising by 0.4%, and the annual reading printing at 0.8%, both meeting the market’s expectations. The Wholesale Price Index, however, plunged, down by 3.5% when compared to a year earlier. The US has just released Initial Jobless Claims for the week ended May 8, which resulted at 2.98 million, worse than the 2.5 million expected. As it has been happening lately, the FX board barely reacted to the headline, although US indexes extended their declines, with the DJIA dangerously close to piercing the 23,000 level.
The EUR/USD pair trades near a daily low of 1.0774, holding at the lower end of its latest range. The pair has been unable to produce a relevant directional movement in the last few days, with selling interest aligned in the 1.0890/1.0900 price zone.
To the downside, support stands in the 1.0760 price zone. The 4-hour chart above shows that the pair is developing below all of its moving averages, with the 20 SMA gaining bearish strength below the larger ones. Technical indicators have turned south, the Momentum crossing its midline and the RSI heading firmly lower at around 38, in line with further declines ahead.
Support levels are now at 1.0760, 1.0720, and 1.0680. Resistance levels are at 1.0830, 1.0865, and 1.0890.
For next week, our technical indicators suggest initiating a short position at or above 1.0850, with a stop set at 1.0875. However, there is a possibility that EURUSD could break through the strong resistance level of 1.0875, but the upside is limited to 1.09, according to our technical analysis, illustrated in the following chart.
EUR to USD forecast for tomorrow Euro to Dollar forecast on Friday, May, 15: exchange rate 1.0795 Dollars, maximum 1.0957, minimum 1.0633. EUR to USD forecast on Monday, May, 18: exchange rate 1.0834 Dollars, maximum 1.0997, minimum 1.0671. Euro to Dollar forecast on Tuesday, May, 19: exchange rate 1.0804 Dollars, maximum 1.0966, minimum 1.0642. EUR to USD forecast on Wednesday, May, 20: exchange rate 1.0812 Dollars, maximum 1.0974, minimum 1.0650.
In 1 week, Euro to Dollar forecast on Thursday, May, 21: exchange rate 1.0845 Dollars, maximum 1.1008, minimum 1.0682. EUR to USD forecast on Friday, May, 22: exchange rate 1.0804 Dollars, maximum 1.0966, minimum 1.0642. Euro to Dollar forecast on Monday, May, 25: exchange rate 1.0743 Dollars, maximum 1.0904, minimum 1.0582. EUR to USD forecast on Tuesday, May, 26: exchange rate 1.0666 Dollars, maximum 1.0826, minimum 1.0506. Euro to Dollar forecast on Wednesday, May, 27: exchange rate 1.0694 Dollars, maximum 1.0854, minimum 1.0534.
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 future performance of the EUR/USD.