Forex Forecast: 2 – 9 May 2022

EURUSD Rates Week in Review

Last week, our technical indicators suggested to go Long on the currency pair at or below 1.09226, setting a stop loss at 1.0764, and Short it at or above 1.10218, setting a stop loss at 1.1111.

This week, EURUSD price range was 1.0842 high, set this past Monday, and 1.0472 set today, Thursday. Following, last week technical recommendations, while keeping trading discipline, Monday, we could have bought the currency pair at 1.0764, selling it on an intraday trading at 1.0764, for 0.71% ROI.

 Fundamental Overview

Following a brief consolidation phase during the Asian trading hours on Thursday, EURUSD has met fresh bearish pressure and plunged to its lowest level since January 2017 at 1.0481. The pair, however, staged a rebound in the early European morning and was last seen trading above 1.0550. The positive shift witnessed in risk sentiment and profit-taking ahead of the key US data could open the door for additional recovery gains toward 1.0600.

Supported by a 4% jump seen in the benchmark 10-year US Treasury bond yields, the US Dollar Index rose 0.7% on Wednesday. Just when it looked like the dollar rally was losing steam in the Asian session on Thursday, the Bank of Japan’s (BOC) decision to leave its policy settings unchanged triggered another wave of dollar-buying and caused EUR/USD to edge lower.

Nevertheless, EUR/JPY also rose sharply when European traders entered the market, suggesting that the shared currency managed to capture some of the outflows out of the Japanese yen. Commenting on the policy outlook, Bank of Japan Governor Haruhiko Kuroda said western central banks were normalizing their policy but Japan was not in such a situation given the price trend and the state of the economy.

Later in the session, the US Bureau of Economic Analysis will announce its first estimate of the annualized Gross Domestic Product (GDP) growth for the first quarter. The market consensus points to an expansion of only 1.1% following the impressive 6.9% growth recorded in the fourth quarter of 2021.

Although it’s difficult to say whether or not the greenback has reached the end of its rally, market participants could see a disappointing US GDP print as an opportunity to book some of their profits before the end of the month and help EURUSD push higher. On the other hand, an upbeat growth figure could make it difficult for the pair to gain traction. Nevertheless, US stock index futures are up between 0.7% and 2% in the European session and a strong upsurge in Wall Street’s main indexes should limit the dollar’s gains in the short term.

Technical Analysis

EUR/USD stays below 1.0500 after hot German inflation data, as trades deep in negative territory below 1.0500, and as investors await the first-quarter GDP growth report from the US. The data from Germany showed that the annual HICP jumped to 7.8% in April from 7.6% in March, surpassing the market expectation of 7.6%, but failed to help the euro find demand.

The one-week-old descending trend line forms the initial resistance at 1.0600. In case the pair rises above that level and starts using it as support, it could target 1.0650 (20-period SMA) and 1.0700 (psychological level, static level) next.

On the downside, the first support is located at 1.0500 (psychological level, static level) before 1.0460 (static level) 1.0400 (psychological level).

 For next week, As the EURUSD price breaks the global minimum, price level of 1.0537, and after a strong downside movement, I believe the currency pair price is oversold< hence, we should expect some consolidation in the week ahead and/or a potential rebound to 1.07 price level. So, next week, our technical analysis is recommending to go Long at or below 1.08, setting a Stop Loss at 1.05, and Short it at or above 1.09459, setting a Stop Loss at 1.11748.

 

As of 2:50 PM (GMT), the EURUSD was trading at 1.05.

EUR to USD forecast for tomorrow: Euro to Dollar forecast on Friday, April, 29: exchange rate 1.0473 Dollars, maximum 1.0630, minimum 1.0316. EUR to USD forecast on Monday, May, 2: exchange rate 1.0401 Dollars, maximum 1.0557, minimum 1.0245. Euro to Dollar forecast on Tuesday, May, 3: exchange rate 1.0317 Dollars, maximum 1.0472, minimum 1.0162. EUR to USD forecast on Wednesday, May, 4: exchange rate 1.0284 Dollars, maximum 1.0438, minimum 1.0130.

In 1 week, Euro to Dollar forecast on Thursday, May, 5: exchange rate 1.0269 Dollars, maximum 1.0423, minimum 1.0115. EUR to USD forecast on Friday, May, 6: exchange rate 1.0329 Dollars, maximum 1.0484, minimum 1.0174. Euro to Dollar forecast on Monday, May, 9: exchange rate 1.0338 Dollars, maximum 1.0493, minimum 1.0183. EUR to USD forecast on Tuesday, May, 10: exchange rate 1.0308 Dollars, maximum 1.0463, minimum 1.0153. Euro to Dollar forecast on Wednesday, May, 11: exchange rate 1.0288 Dollars, maximum 1.0442, minimum 1.0134.

 

 

 

 

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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