Forex Forecast: 22 – 26 March 2021
EURUSD Rates Week in Review
Last week, our technical indicators suggested go short at or above 1.19441, and initiate new Long positions at or below 1.19. This week, EURUSD price range was 1.1989 high, set today, Thursday, and 1.1882 low, set this past Tuesday. So, this week, we could have Short the currency pair on Monday at 1.1965 on an intraday trading, buying it back at 1.1913, for 0.43% gain. Tuesday, we could have initiated a Long position at 1.1884, selling it on an intraday trading at 1.1984, for 0.84% . Wednesday, we could have Short it at 1.1984, and covering it on a intraday trading at 1.1887, for 0.81% profit. Today, we could have Short it at 1.1987, covering it on an intraday trading at 1.1913, for an extra 0.62% ROI.
The EURUSD pair peaked at 1.1988, where it also topped last week, retreating afterwards as the greenback regained its poise. Following a dovish US Federal Reserve announcement on Wednesday, stocks advanced, with the DJIA and the S&P reaching record highs.
Government bond yields retreated, pouring some cold water on inflation concerns. But as European traders come to play, things changed. Local indexes are in retreat mode, while US Treasury yields hit fresh over one-year highs, with that on the 10-year note hitting 1.74%.
The EU published the January Trade Balance, which posted a modest surplus of €6.3 billion, well below the expected €25.3 billion.
On the other hand, the US published the March Philadelphia Fed Manufacturing Survey, which jumped to 51.8, much better than anticipated. The country also published Initial Jobless Claims for the week ended March 12, which missed expectations, up to 770K. The dollar continued to strengthen after the release, as yields pressure highs while Wall Street is set to open in the red.
EURUSD is trading below 1.1950, reversing some of the post-FOMC rise towards 1.20. The Fed pledged to keep loose policy for longer. A speech by ECB President Lagarde and US economic data awaited.
The EURUSD pair trades at daily lows in the 1.1920 price zone, and the above 4-hour chart shows that the risk is skewed to the downside. The pair met sellers around a bearish 100 SMA and after briefly surpassed the 50% retracement of the November/January rally.
It is now about to cross below a flat 20 SMA while technical indicators resume their declines, crossing their midlines into bearish territory.
Support levels are at 1.1885, 1.1840, and 1.1790. Resistance levels are at 1.1920, 1.1970, and 1.2010.
For next week, our technical indicator are suggesting a continued negative slope as indicated in the following chart.
“The Federal Reserve kept interest rates and its monthly pace of bond buying unchanged Wednesday, even as it acknowledged an improved economic backdrop as vaccine roll outs gather pace.” It seems like the market has priced in a potential rate-hike (pretty unlikely to be honest, but the reaction shows it), which is why equities and majors versus USD are pumping.
The FED has decided to keep its Bond Purchasing Program unchanged. They probably do not do anything to cap yields, which will likely cause more inflation-worries and so a potential reversal of the current moves due to rising yields.
Hence we will go Short at or above 1.1940, and Long at or below 1.19.
As of 4:18 PM (GMT), the EURUSD was trading at 1.19357.
EUR to USD forecast for tomorrow: Euro to Dollar forecast on Friday, March, 19: exchange rate 1.2058 Dollars, maximum 1.2239, minimum 1.1877. EUR to USD forecast on Monday, March, 22: exchange rate 1.2027 Dollars, maximum 1.2207, minimum 1.1847. Euro to Dollar forecast on Tuesday, March, 23: exchange rate 1.2005 Dollars, maximum 1.2185, minimum 1.1825. EUR to USD forecast on Wednesday, March, 24: exchange rate 1.1978 Dollars, maximum 1.2158, minimum 1.1798.
In 1 week, Euro to Dollar forecast on Thursday, March, 25: exchange rate 1.2031 Dollars, maximum 1.2211, minimum 1.1851. EUR to USD forecast on Friday, March, 26: exchange rate 1.2059 Dollars, maximum 1.2240, minimum 1.1878. Euro to Dollar forecast on Monday, March, 29: exchange rate 1.2107 Dollars, maximum 1.2289, minimum 1.1925. EUR to USD forecast on Tuesday, March, 30: exchange rate 1.2039 Dollars, maximum 1.2220, minimum 1.1858. Euro to Dollar forecast on Wednesday, March, 31: exchange rate 1.1988 Dollars, maximum 1.2168, minimum 1.1808.
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.