How to use the basic technical analysis concepts we have shared with you to predict the next week’s currency pair price movement

 

EURUSD Rates Week in Review

EUR/USD has dropped below 1.0777, hitting the lowest since 2017. Dollar demand is elevated and the euro is struggling after the ECB announced a new QE program worth €750 billion. US jobless claims are eyed. Last week, our technical indicators suggested to go short between 1.13469 and 1.1331. Last week, the EURUSD high was at 1.3337, trading now at 1.07429 as of 12:02 (GMT+0). Meaning our technical indicators were right on the money, allowing to lock 5.21% profit.

 

Fundamental Overview

“There are no limits to our commitment to the euro” were  Christine Lagarde’s words, during the European night, after announcing a whopping €750 billion bond-buying scheme. EURUSD initially responded positively, before turning south again.

 

The President of the European Central Bank convened an emergency meeting of the Governing Council to launch the Pandemic Emergency Purchase Program (PEPP) in which it will buy both private and public sector securities, a response to the corona-virus crisis. The ECB will relax its self-imposed limits on bond-buying, including buying Greek debt. Moreover, Lagarde said more can be done as “extraordinary times require extraordinary measures”.

 

The euro benefited from the pledge to help, but flooding the world with currency means every euro’s value is diluted. The corona-virus related move comes on top of the bank’s standard QE programs. That is the first downside factor for the euro.

 

The second factor is the devastating spread of the disease in the old continent and the ongoing lockdown. The number of Covid-19 cases in Europe has surpassed that in China, where the respiratory disease originated. Italy reported another daily record in deaths with 475 on Wednesday with mortalities rising everywhere.  German Chancellor Angela Merkel addressed the nation in a rare event, and so did Spain’s King. Additional countries are imposing shutdowns to contain the spread but choke the economy. Airlines in dire straits and automakers are closing plants.

The third factor weighing on EURUSD, and that may push it to new 2020 lows is the extreme demand for the dollar. The world’s reserve currency is now the ultimate safe-haven. Investors are in a “sell-everything” mode – trading was halted on Wall Street once again – and money flows to the US dollar.

The Federal Reserve is providing more liquidity, almost on a daily basis, to alleviate pressure in markets, but that does not seem to ease demand. Congress has advanced one corona-virus relief bill and the administration is working on massive stimulus, including “helicopter money”, sending a cheque to every American. Moreover, White House adviser Larry Kudlow said the US may buy equities, but that seems a remote option for now.

 

Corona-virus has taken the lives of 150 people in the US, according to Johns Hopkins University, and infections near 10,000. A leap in cases is expected as America ramps up testing.  In the meantime,

GBPUSD crashed some 600 pips to the lowest since 1985, AUDUSD tumbled to the lowest in 17 years, and even the yen,  until recently the No. 1 choice in times of trouble, which is under immense demand.

 

Is it EURUSD’s turn, at least to fall to the lowest since 2017? 

The answer depends on fast-moving developments, with health-related headlines, additional lockdowns, layoff announcements, and policy responses, now from governments in the limelight.

One economic figure stands out, and it is a high-frequency one that now returns to the spotlight. Weekly jobless may show a rise in claims as shutdown may trigger the first layoffs.

 

Technical Analysis

The Relative Strength Index is above 30, outside oversold conditions and allowing for more falls. The currency pair is trading below the 50, 100, and 200 Simple Moving Averages and momentum remains to the downside.

 

Support awaits at 1.08, which was the low point on Wednesday. It is followed by 1.0777, the 2020 low. Further down, the next levels to watch are 1.0720 and 1.0650.

 

Some resistance is at 1.0855, which capped the pair in late February, followed by 1.0975, the daily high, and then by 1.1050 and 1.11.

 

 

For next week, and as of today at 12:02 PM (GMT+0), the EURUSD last trade was 1.07429. Technical indicators suggest to keep shorting the EURUSD, even at this price level of 1.07429, and covering it between 1.06-1.0485.

 

 

 

EUR to USD forecast for tomorrow

Euro to Dollar forecast on Friday, March, 20: exchange rate 1.0817 Dollars, maximum 1.0979, minimum 1.0655. EUR to USD forecast on Monday, March, 23: exchange rate 1.0659 Dollars, maximum 1.0819, minimum 1.0499. Euro to Dollar forecast on Tuesday, March, 24: exchange rate 1.0741 Dollars, maximum 1.0902, minimum 1.0580. EUR to USD forecast on Wednesday, March, 25: exchange rate 1.0656 Dollars, maximum 1.0816, minimum 1.0496.

 

 

In 1 week Euro to Dollar forecast on Thursday, March, 26: exchange rate 1.0574 Dollars, maximum 1.0733, minimum 1.0415. EUR to USD forecast on Friday, March, 27: exchange rate 1.0551 Dollars, maximum 1.0709, minimum 1.0393. Euro to Dollar forecast on Monday, March, 30: exchange rate 1.0410 Dollars, maximum 1.0566, minimum 1.0254. EUR to USD forecast on Tuesday, March, 31: exchange rate 1.0552 Dollars, maximum 1.0710, minimum 1.0394. Euro to Dollar forecast on Wednesday, April, 1: exchange rate 1.0606 Dollars, maximum 1.0765, minimum 1.0447.

 

Again, remember to place stop losses, according to your risk tolerance as unexpected news coming to the market may significantly affect trends and prices. Until the next article, we wish 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 nor Keysoft. 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 the future performance of the EUR/USD.

Write a comment

Your email address will not be published. Required fields are marked *

Select the fields to be shown. Others will be hidden. Drag and drop to rearrange the order.
  • Image
  • SKU
  • Rating
  • Price
  • Stock
  • Availability
  • Add to cart
  • Description
  • Content
  • Weight
  • Dimensions
  • Additional information
Click outside to hide the comparison bar
Compare

Thanks for contacting us!

We will get back to you asap.