Forex Forecast: 21 – 25 June 2021

 

EURUSD Rates Week in Review

Last week, our technical indicators suggested to short the EURUSD at or above 1.21892, setting a stop loss at 1.2285, and to go Long at or below 1.2050, setting a stop loss at 1.20.

This week, EURUSD price range was 1.2149 high, set this past Tuesday, and 1.1937 low, set today. Hence, the first trading opportunity came yesterday, Wednesday to go Long on the currency pair at 1.1995, selling it on an intraday trading at 1.2133, for 1.15% profit. Today, we could have bought it at 1.1939, covering it on an intraday trading at 1.2004, for 0.54% profit.

 Fundamental Overview

these words by Federal Reserve Chair Jerome Powell have been reverberating through markets; “You can think of this meeting as the talking-about-talking-about meeting, if you like”. The world’s most powerful central banker has referred to a discussion about tapering of its bond-buying scheme, which is now on the agenda.

Powell’s words came after the bank released its explosive “dot plot”, where it signaled two rate hikes in 2023 against none at all in the previous projections. Moreover, the Fed raised its inflation forecast to 3% in 2021 and upgraded its outlook for employment and growth for this year.

The dollar reacted in the immediate aftermath, took a break in Asia, and is now surging ahead as more investors and analysts digest the sharp hawkish shift from Washington. At the time of writing, EURUSD has hit 1.1936, the lowest since mid-April.

Markets seem to shrug off Powell’s caution, such as asking observers to take the Fed’s projections with a grain of salt and clinging to his acknowledgment that inflation could be higher and more persistent than expected. The pace of vaccinations and the rapid reopening seems to have startled Powell.

The Fed’s newfound hawkishness contrasts the European Central Bank’s commentary in recent days. Officials such as Chief Economist Phillip Lane, have reiterated the message that ending the bond-buying scheme is premature. Since last week’s ECB meeting, public remarks have been more aligned to the dovish side.

Apart from digesting the Fed, traders will eye Thursday’s release of weekly jobless claims and the Philly Fed Manufacturing Index. US President Joe Biden is back in Washington after a summit with his Russian counterpart Vladimir Putin. Markets seem less interested in geopolitics and more in bipartisan talks related to an infrastructure bill.

All in all, the Fed remains in focus even many hours after the event concluded.

 Technical Analysis

EURUSD tumbles to lowest since April as the dollar resumes its gains. The EURUSD has extended its falls below 1.20, trading at the lowest since mid-April. The dollar has resumed its gains related to the hawkish Fed meeting on Wednesday, where the bank signaled tapering bond buys and raising rates will come sooner.

The Relative Strength Index (RSI) on the following four-hour chart is well below 30, deep in oversold territory. Momentum is sharply to the downside and the pair is trading well below the 50, 100 and 200 simple moving averages.

The next level to watch on the downside is 1.1925, which capped the pair on its way up in early April. It is followed by 1.1860, which provided support around that time. Next, 1.1830 and 1.1780 are eyed.

 

Some resistance is at 1.1985, which was a cushion back in early May. It is followed by 1.2020 and then 1.2050, which was a swing low last month. Further above, the pre-crash low of 1.2090 now serves as resistance.

 For next week, if the EURUSD drops to the zone. as I have marked in the following chart, I would consider a buy entry between 1.2065-1.2085, with SL below 1.2040, and TP at 1.2180.

As illustrated in the following chart, our technical indicators suggest to buy at or below 1.2085, setting a Stop Loss at 1.1950, and Short it at or above 1.21, with a Stop loss at 1.2215.

 

As of 11:48 PM (GMT+1), the EURUSD was trading at 1.19318.

 

EUR to USD forecast for tomorrow:  Euro to Dollar forecast on Friday, June, 18: exchange rate 1.1913 Dollars, maximum 1.2092, minimum 1.1734. EUR to USD forecast on Monday, June, 21: exchange rate 1.1919 Dollars, maximum 1.2098, minimum 1.1740. Euro to Dollar forecast on Tuesday, June, 22: exchange rate 1.1938 Dollars, maximum 1.2117, minimum 1.1759. EUR to USD forecast on Wednesday, June, 23: exchange rate 1.1867 Dollars, maximum 1.2045, minimum 1.1689.

 

In 1 week, Euro to Dollar forecast on Thursday, June, 24: exchange rate 1.1863 Dollars, maximum 1.2041, minimum 1.1685. EUR to USD forecast on Friday, June, 25: exchange rate 1.1878 Dollars, maximum 1.2056, minimum 1.1700. Euro to Dollar forecast on Monday, June, 28: exchange rate 1.1878 Dollars, maximum 1.2056, minimum 1.1700. EUR to USD forecast on Tuesday, June, 29: exchange rate 1.1878 Dollars, maximum 1.2056, minimum 1.1700. Euro to Dollar forecast on Wednesday, June, 30: exchange rate 1.1913 Dollars, maximum 1.2092, minimum 1.1734.

 

 

 

 

 

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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