Forex Forecast: 2 – 6/11/2020
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 go long on the currency pair at or below 1.1780 and shorting it at or above 1.19. The currency pair through this week has been trading between 1.1861 and 1.1655. Therefore and according to our last week technical indicators, there were just two long trading opportunities. Wednesday, where we could have bought the EURUSD on an intraday trading at 1.1717, selling it at 1.1798, locking in 0.69% profit. Today, Thursday, we could have bought it on an intraday trading at 1.1760, selling it at 1.1780 for an extra 0.17% gain.
There is always a countertrend within every trend, and that is probably behind the bounce in EURUSD, which has no other justification. The world’s most popular currency pair is taking a breather, but the factors that hit it on Wednesday will likely resume, probably driven by the European Central Bank.
Economists expected the ECB to leave policy unchanged, but events are unfolding rapidly. Both Germany and France declared month-long lockdowns in all of their territories in response to the surge in coronavirus cases. The near-parallel announcements in Berlin and Paris weighed on the euro, and they may push the central bank to act as well.
In the meantime, Cases are surging in the old European continent:
Christine Lagarde, President of the European Central Bank, is unlikely to cut interest rates – as they are already at -0.50%. However, the bank could expand the Pandemic Emergency Purchase Program (PEPP) and announce it is accelerating the pace of bond-buying.
She may also opt to lay the groundwork for more action in December when the ECB publishes new forecasts. In any case, the worsening economic outlook will likely be reflected in Thursday’s decision and could weigh on the euro.
The US elections also carry a dose of uncertainty. A long list of opinion polls published on Wednesday continued showing Democrat Joe Biden leading over President Donald Trump, but the races are close in critical states such as Florida, the perennial swing state, and North Carolina, where a critical Senate race is tight.
Markets prefer a landslide victory for Democrats, that would enable them to pass a massive stimulus package, and seem to shrug off concerns about market-unfriendly policies.
A dose of stability may come from the fact that over 75 million Americans have already voted, 55% of the total 2016 vote count, and that Biden’s chances are solid. However, the memory of 2016 remains prevalent. Uncertainty drives traders into the safety of the US dollar, and could also push EURUSD down.
EURUSD has dropped below 1.17, to the lowest since late September. The ECB expressed concern about the spread of Covid and signalled more stimulus in December. Earlier, US GDP beat estimates.
EURUSD navigates the area of fresh multi-day lows in the 1.1700 neighbourhood on the back of the prevailing risk aversion atmosphere.
The continuation of the downtrend seems likely in the very near-term. A breach of the key contention area in the 1.1700/1.1685 area could pave the way for a retracement to the September’s low at 1.1612.
Looking at the broader scenario, the bullish view on EURUSD is expected to remain unchanged as long as the pair trades above the critical 200-day SMA, today at 1.1310.
For next week and as illustrated in the following EURUSD 4-hour chart, EURUSD has given a downside breakout from the Descending Triangle Pattern, which is formed at the resistance level (as shown in chart). According to chart pattern analysis, we might see a small upside correction move from trend line support towards resistance. Hence, one can initiate a long trade at 1.1750 with a risk management system, setting a stop-loss at 1.17204. A short position may be entered at 1.17204, for a target price covering position at 1.6616.
As of 4:35 PM (GMT+1), the EURUSD was trading at 1.16596.
EUR to USD forecast for tomorrow, Euro to Dollar forecast on Friday, October, 30: exchange rate 1.1678 Dollars, maximum 1.1853, minimum 1.1503. EUR to USD forecast on Monday, November, 2: exchange rate 1.1685 Dollars, maximum 1.1860, minimum 1.1510. Euro to Dollar forecast on Tuesday, November, 3: exchange rate 1.1664 Dollars, maximum 1.1839, minimum 1.1489. EUR to USD forecast on Wednesday, November, 4: exchange rate 1.1685 Dollars, maximum 1.1860, minimum 1.1510.
In 1 week, In 1 week In 1 week Euro to Dollar forecast on Thursday, November, 5: exchange rate 1.1634 Dollars, maximum 1.1809, minimum 1.1459. EUR to USD forecast on Friday, November, 6: exchange rate 1.1679 Dollars, maximum 1.1854, minimum 1.1504. Euro to Dollar forecast on Monday, November, 9: exchange rate 1.1723 Dollars, maximum 1.1899, minimum 1.1547. EUR to USD forecast on Tuesday, November, 10: exchange rate 1.1786 Dollars, maximum 1.1963, minimum 1.1609. Euro to Dollar forecast on Wednesday, November, 11: exchange rate 1.1810 Dollars, maximum 1.1987, minimum 1.1633.
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.