Forex Forecast: 20 – 24 December 2021

 

EURUSD Rates Week in Review

Last week, our technical indicators suggested to go Long at or below 1.13699, setting a Stop Loss at 1.12379, and to Short the currency pair at or above 1.1440, setting a Stop Loss at 1.15.

This week, EURUSD price range was 1.1321 high, set today, Thursday, and 1.1221 low, set yesterday. Indeed, a fantastic week for Long positions on the EURUSD. So, this  past Monday, we could have bought the currency pair at 1.1261, selling it on an intraday trading at 1.1319, for 0.52% profit. Tuesday, we could have bought it at 1.1251, selling it on an intraday trading at 1.1325, for 0.63% profit. Wednesday, we could have bought it at 1.1238, selling it on an intraday trading at 1.1298, for 0.53% profit.  Today, Thursday, we could have bought it at 1.1279, selling it on an intraday trading at 1.1358, for an extra 0.7% ROI.

Fundamental Overview

The US Federal Reserve inspired rally resulted in EURUSD reaching 1.1318 early on Thursday, with the pair retreating back below the 1.1300 figure ahead of the European Central Bank decision. As widely anticipated, the central bank maintained its rates on hold and confirmed the Pandemic Emergency Purchase Program will end in March 2022. The Government Council also decided to expand its Assets Purchase Program to €40 billion per month in the second quarter and to €30 billion in the third quarter, to partially compensate the end of the monthly  €60 billion bond-buying through PEPP.

Ahead of the ECB decision, the Bank of England hiked its main rate by 15 bps to 0.25%, helping EURUSD to recover some ground ahead of the decision. Overheating inflation has finally twisted central bankers’ hands, as three major central banks, including the US Federal Reserve, have announced some form of tightening within the last 24 hours.

Earlier in the day, Markit published the preliminary estimates of the December PMIs for the Union. According to the official report, the latest wave of coronavirus has put a halt on Germany’s economic recovery, with the Services PMI falling to a 10-month low of 48.4 and the manufacturing index surging to a three months high of 53.2. The situation repeated through all the EU, with the services index contracting to 53.3 and the manufacturing PMI beating expectations with 58.

The US published November Building Permits and Housing Starts, up 3.6% and 11.8%, respectively. The country also released Initial Jobless Claims for the week ended December 10, which increased to 206K, missing the market’s expectations. Markit will later publish US PMIs, while the country will release December Industrial Production and Capacity Utilization.

Technical Analysis

The EURUSD pair trades near a daily high of 1.1359, maintaining a near term bullish stance, although still far from confirming substantial strength.

 

The 4-hour chart above illustrates that the pair is once again above its 20 and 100 SMAs, which anyway converge directionless in the 1.1280 price zone. The 200 SMA maintains its bearish stance, currently a few pips below 1.1380, the 38.2% retracement of the November slump.

At the same time, technical indicators head firmly higher within positive levels, reflecting persistent buying interest. Nevertheless, the pair needs to clear the mentioned Fibonacci resistance level to actually turn bullish and extend its gains towards the 1.1460/80 price zone.

Support levels are at 1.1305, 1.1260, and 1.1220.

Resistance levels are at 1.1380, 1.1425, and1.1470.

For next week, We’re looking at a possible upside move to 1,1318 and potential short-term buying opportunities.  There is also a chance for a continuation of the downtrend in the very short-term, as Long investor lock in profits from this week’s trading! According to our technical analysis illustrated in the following chart, it is recommending to go Long at or below 1.1350, setting a Stop Loss at 1.12, and to Short the currency pair at or above 1.1355, setting a Stop Loss at 1.15.

 

As of 4:11 PM (GMT), the EURUSD was trading at 1.13092.

 

EUR to USD forecast for tomorrow: Euro to Dollar forecast on Friday, December, 17: exchange rate 1.1330 Dollars, maximum 1.1500, minimum 1.1160. EUR to USD forecast on Monday, December, 20: exchange rate 1.1307 Dollars, maximum 1.1477, minimum 1.1137. Euro to Dollar forecast on Tuesday, December, 21: exchange rate 1.1269 Dollars, maximum 1.1438, minimum 1.1100. EUR to USD forecast on Wednesday, December, 22: exchange rate 1.1296 Dollars, maximum 1.1465, minimum 1.1127.

 

In 1 week, Euro to Dollar forecast on Thursday, December, 23: exchange rate 1.1250 Dollars, maximum 1.1419, minimum 1.1081. EUR to USD forecast on Friday, December, 24: exchange rate 1.1321 Dollars, maximum 1.1491, minimum 1.1151. Euro to Dollar forecast on Monday, December, 27: exchange rate 1.1307 Dollars, maximum 1.1477, minimum 1.1137. EUR to USD forecast on Tuesday, December, 28: exchange rate 1.1277 Dollars, maximum 1.1446, minimum 1.1108. Euro to Dollar forecast on Wednesday, December, 29: exchange rate 1.1286 Dollars, maximum 1.1455, minimum 1.1117.

 

 

 

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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