Forex Forecast: 20 – 24 February 2023
Last week, our technical indicators suggested going Long on the EURUSD at or below 1.08, setting a stop loss at 1.05484, and going Short at or below 1.10391, setting a stop loss at 1.11903.
This week, EURUSD price range was 1.0805 high set this past Tuesday, and 1.0655 low set this past Monday. Therefore, Monday, we could have bought the currency pair at 1.0657, selling it on an intraday trading at 1.0729, for 0.68% profit. Tuesday, we could have bought it at 1.0708, selling it on an intraday trading at 1.0803, for 0.89% profit. Wednesday, we could have bought it at $1.0662, selling it on an intraday trading at 1.0744, for 0.77% profit. Today, we could have bought it at $1.0687, selling it on an intraday trading at 1.0721, for an extra 0.32% ROI.
EURUSD has regained its traction following Wednesday’s decline and turned positive on the day slightly above 1.0700 early Thursday. The pair seems to have defined the lower limit of its trading range and the US Dollar’s valuation is likely to continue to drive the action in the short term.
After the US Census Bureau reported on Wednesday that Retail Sales rose by 3% in January, compared to the market expectation for an increase of 1.8%, the US Dollar managed to preserve its strength, forcing EURUSD to stays on the back foot. Later in the American session, Wall Street’s main indexes gathered recovery momentum and registered daily gains. In turn, the US Dollar lost its appeal and allowed EURUSD to retrace its daily slide.
Early Thursday, US stock index futures trade modestly higher on the day. In case risk flows continue to dominate the action in the second half of the day, EURUSD could continue to stretch higher.
Meanwhile, European Central Bank President Christine Lagarde told European Parliament late Wednesday that they intend to raise key rates by 50 basis points (bps) in March. Lagarde reiterated that the underlying inflation in the Euro area is still high and that price pressures remain strong.
A recently conducted survey by Reuters revealed that a majority of experts see the ECB raising key rates at least by another 25 bps in the second quarter.
Later in the day, ECB Chief Economist Phillip Lane and ECB executive board member Fabio Panetta will be delivering speeches. In case ECB officials leave the door open for additional rate increases after March, the Euro’s losses are likely to remain limited in the short term.
On the other hand, market participants will also pay close attention to mid-tier macroeconomic data releases from the US. In January, the Producer Price Index (PPI) is forecast to edge lower to 5.4% on a yearly basis from 6.2% in December. The immediate reaction to the PPI data should be straightforward with a stronger-than-expected annual increase helping the US Dollar hold its ground against its rivals and vice versa.
Nevertheless, the rebound in US stocks witnessed on Wednesday despite the hot inflation and impressive Retail Sales data suggests that the PPI is unlikely to have a long-lasting impact on risk sentiment and the US Dollar’s valuation.
EURUSD holds modest gains around 1.0700 ahead of ECB-speak.
The currency pair is holding modest gains at around 1.0700 in the early European morning. The US Dollar retreats alongside the US Treasury bond yields amid a better market mood. Focus shifts to the ECB commentary and a fresh batch of US data for further trading impetus.
Although EURUSD is holding above 1.0700, where the Fibonacci 61.8% retracement of the latest uptrend is located, buyers are likely to wait for the pair to clear the 50-period Simple Moving Average (SMA) on the four-hour chart at 1.0720.
A four-hour close above that level could open the door for an extended recovery toward 1.0760 (Fibonacci 50% retracement), 1.0775 (200-period SMA) and 1.0800 (100-period SMA).
On the downside, 1.0700 aligns as immediate support before 1.0660 (static level).
EURUSD tested that latter support three time in the last 10 days, highlighting its significant as a technical level. If the pair flips that level into resistance, it could target 1.0600 (psychological level).
For next week, our technical analysis are looking for a selling opportunity on the EURUSD at around 1.076 zone, but a bearish signal must be first confirmed, before shorting it.
Hence, our technical analysis are suggesting going Short at or above 1.07585, setting a Stop Loss at 1.08, and going Long at or below 1.06966, setting a Stop Loss at 1.0550.
As of 10:41 AM (GMT), the EURUSD was trading at 1.07093.
EUR to USD forecast for tomorrow: Euro to Dollar forecast on Friday, February, 17: exchange rate 1.0647 Dollars, maximum 1.0807, minimum 1.0487. EUR to USD forecast on Monday, February, 20: exchange rate 1.0654 Dollars, maximum 1.0814, minimum 1.0494. Euro to Dollar forecast on Tuesday, February, 21: exchange rate 1.0703 Dollars, maximum 1.0864, minimum 1.0542. EUR to USD forecast on Wednesday, February, 22: exchange rate 1.0639 Dollars, maximum 1.0799, minimum 1.0479.
In 1 week, Euro to Dollar forecast on Thursday, February, 23: exchange rate 1.0667 Dollars, maximum 1.0827, minimum 1.0507. EUR to USD forecast on Friday, February, 24: exchange rate 1.0651 Dollars, maximum 1.0811, minimum 1.0491. Euro to Dollar forecast on Monday, February, 27: exchange rate 1.0653 Dollars, maximum 1.0813, minimum 1.0493. EUR to USD forecast on Tuesday, February, 28: exchange rate 1.0588 Dollars, maximum 1.0747, minimum 1.0429. Euro to Dollar forecast on Wednesday, March, 1: exchange rate 1.0475 Dollars, maximum 1.0632, minimum 1.0318.
Until next article, wishing all of you wealthy trading!
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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