Forex Forecast: 20 – 24 June 2022
EURUSD Rates Week in Review
Last week, our technical indicators suggested to go Short at or above 1.065, setting a Stop loss at 1.08, and go Long on the currency pair at or below 1.07, setting a Stop loss at 1.0332.
This week, EURUSD price range was 1.0520 high, set this past Monday, and 1.0359 low, set this past Wednesday. So, Monday, we could have bought the currency pair at 1.0402, selling it on an intraday trading at 1.0518, for 1.12% profit. Tuesday, we could have bought it at 1.0398, selling it on an intraday trading at 1.0484, for 0.83% profit. Wednesday, we could have bought it at 1.0361, selling it on an intraday trading at 1.0507, for 1.41% profit. Today, Thursday, we could have bought it at 1.0383, covering it on an intraday trading at 1.0472, for an extra 0.86% ROI.
EURUSD has reversed its direction and declined below 1.0400 early Thursday after having closed in positive territory on Wednesday. The shared currency is likely to continue to have a difficult time finding demand given the European Central Bank’s (ECB) policy outlook.
Following its ad hoc meeting to address the fragmentation issue on Wednesday, the ECB stated that it will apply “flexibility in reinvesting redemptions coming due in the PEPP portfolio, with a view to preserving the functioning of the monetary policy transmission mechanism.” Although this action helped the market mood improve and allowed the euro to stay resilient against the dollar, it did little to nothing to close the policy gap between the ECB and other major central banks, especially the US Federal Reserve.
The Fed hiked its policy rate by 75 basis points in June. Even though FOMC Chairman Jerome Powell refrained from confirming that they will raise the policy rate by the same amount in July, the dot plot showed that policymakers expect the policy rate to rise to 3.4% by the end of the year.
Meanwhile, the fact that the Swiss National Bank (SNB) announced a surprise 50 basis points rate hike on Thursday reminded investors of the ECB staying behind the tightening curve.
Later in the session, the weekly Initial Jobless Claims, May Housing Starts and the Federal Reserve Bank of Philadelphia will be featured in the US economic docket. In the current market environment, however, these data are unlikely to impact EURUSD’s performance in a meaningful way. In the meantime, the Bank of England will unveil its interest rate decision.
Once again, a hawkish BOE move should cause capital outflows out of the euro to continue. Even if the BOE were to adopt a dovish tone, the dollar should remain preferable over the euro in case investors were to start selling the pound.
EURUSD is dropping below 1.0400 as the US dollar stages a solid comeback amid a souring market mood. The Fed-driven market cheer fades, as the longer-dated Treasury yields see a renewed uptick. Eurozone final inflation eyed.
The pair faces interim support at 1.0380 (static level) ahead of the 1.0360/1.0350 area (Wednesday low, multi-year low set on May 13). With a four-hour close below that region, additional losses toward 1.0300 could be witnessed.
On the other hand, 1.0400 (psychological level, static level) could be seen as first resistance before 1.0430 (20-period SMA) and 1.0470 (Fibonacci 23.6% retracement of the latest downtrend).
In the meantime, the Relative Strength ındex (RSI) indicator on the four-hour chart stays above 30, suggesting that the pair has more room on the downside before turning technically oversold in the short term.
For next week, The EURUSD price made double bottom pattern, as illustrated in the following chart, and short positions should start covering at 1.0360. So, our technical analysis are suggesting a rebound from this price level. EURUSD may reach resistance level of $1.06300 and $1.06333. Hence, our technical indicators are suggesting to go Long on the currency pair at or below 1.06, setting a Stop Loss at 1.0201, and go Short at or above 1.06300, setting a stop loss at 1.075.
As of 11:16 AM (GMT), the EURUSD was trading at 1.04054.
EUR to USD forecast for tomorrow: Euro to Dollar forecast on Friday, June, 17: exchange rate 1.0484 Dollars, maximum 1.0641, minimum 1.0327. EUR to USD forecast on Monday, June, 20: exchange rate 1.0491 Dollars, maximum 1.0648, minimum 1.0334. Euro to Dollar forecast on Tuesday, June, 21: exchange rate 1.0378 Dollars, maximum 1.0534, minimum 1.0222. EUR to USD forecast on Wednesday, June, 22: exchange rate 1.0284 Dollars, maximum 1.0438, minimum 1.0130.
In 1 week, Euro to Dollar forecast on Thursday, June, 23: exchange rate 1.0191 Dollars, maximum 1.0344, minimum 1.0038. EUR to USD forecast on Friday, June, 24: exchange rate 1.0201 Dollars, maximum 1.0354, minimum 1.0048. Euro to Dollar forecast on Monday, June, 27: exchange rate 1.0212 Dollars, maximum 1.0365, minimum 1.0059. EUR to USD forecast on Tuesday, June, 28: exchange rate 1.0190 Dollars, maximum 1.0343, minimum 1.0037. Euro to Dollar forecast on Wednesday, June, 29: exchange rate 1.0160 Dollars, maximum 1.0312, minimum 1.0008.
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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