Forex Forecast: 23 – 27 May 2022

 

EURUSD Rates Week in Review

Last week, our technical indicators suggested to go Long at or below 1.05, setting a Stop Loss at 1.035, and Short it at or above 1.05467, setting a Stop Loss at 1.07.

This week, EURUSD price range was 1.0565 high, set yesterday, Wednesday, and 1.0388 low, set this past Monday. So, Monday, we could have bought the currency pair at 1.0390, selling it on an intraday trading at 1.0442, for 0.5% profit. Tuesday, we could have bought it at 1.0431, selling it on an intraday trading at 1.0554, for 1.18% profit. Wednesday, we could have bought it at 1.0462, selling it on an intraday trading at 1.0563, for 0.97% profit. Today, Thursday, we could have bought it at 1.0467, selling it on an intraday trading at 1.0541, for an extra 0.71% ROI.

 Fundamental Overview

EURUSD has gone into a consolidation phase below 1.0500 early Thursday after having lost nearly 100 pips on Wednesday. The negative shift witnessed in risk sentiment should make it difficult for the shared currency to find demand and force the pair to remain vulnerable in the near term.

Comments from European Central Bank (ECB) officials failed to help the euro on Wednesday as the sharp decline witnessed in global equity indexes allowed safe-haven flows to dominate the financial markets.

Early Thursday, the Euro Stoxx 600 Index is down 1.7% and US stock index futures are falling between 0.7% and 1%, suggesting that markets are likely to remain risk-averse in the second half of the day as well.

ECB Governing Council member Madis Muller noted on Wednesday to see rates rising past zero in 2022. On a more cautious note, Spanish central bank chief Pablo Hernandez de Cos argued that following a rate hike in the early third quarter, further rate increases could be made in subsequent quarters if the medium-term inflation outlook remains around the target.

The ECB will release the accounts of the April monetary policy meeting later in the session. A 25 basis points rate hike in July is already priced in the market reaction is likely to remain muted in case the publication confirms such a decision. In case the ECB statement suggests that policymakers see the need for successive rate hikes amid inflation fears, the pair could regain its traction.

USD Safe Heaven

Powell says the Fed will not hesitate to keep raising rates until inflation comes down.

Federal Reserve Chair Jerome Powell said he is committed to taking interest rates as high as necessary to get inflation headed in the direction of the central bank’s 2% target. “If that involves moving past broadly understood levels of neutral, we won’t hesitate to do that,” he said. “We will go until we feel we’re at a place where we can say financial conditions are in an appropriate place, we see inflation coming down,” he added.

Nevertheless, the risk perception should remain the primary driver of the pair’s action. The US economic docket will feature the weekly Initial Jobless Claims and the Federal Reserve Bank of Philadelphia’s Manufacturing Survey. Unless these data trigger a rebound in US stocks, the greenback should manage to preserve its strength.

Technical Analysis

EURUSD stays in positive territory near 1.0500 in the European session on Thursday as the dollar weakens amid falling US Treasury bond yields. As investors wait for the ECB to publish the accounts of its April policy meeting, markets remain risk-averse, limiting EURUSD’s upside.

 

EURUSD trades slightly below the key 1.0500 level, where the Fibonacci 61.8% retracement and the 100-period SMA on the four-hour chart are located. In case this resistance continues to limit the pair’s upside, sellers are likely to show interest and cause the pair to slide toward 1.0480 (Fibonacci 50% retracement, 50-period SMA),1.0450 (Fibonacci 38.2% retracement) and 1.0420 (Fibonacci 23.6% retracement) afterwards.

On the other hand, a four-hour close above 1.0500 could be seen as a bullish development and open the door for an extended rebound toward 1.0550 (static level) and 1.0580 (static level).

 For next week, EURUSD price was retested it and pulled back. Our technical analysis are suggesting the currency pair should retest the resistance line soon, before resuming its downtrend towards EURUSD parity (1.00000). Hence, our technical analysis is recommending to go Long at or below 1.04, setting a Stop Loss at 1.00, and Short it at or above 1.04961 setting a Stop Loss at 1.06.

 

As of 12:53 PM (GMT), the EURUSD was trading at 1.05178.

 

EUR to USD forecast for tomorrow: Euro to Dollar forecast on Friday, May, 20: exchange rate 1.0388 Dollars, maximum 1.0544, minimum 1.0232. EUR to USD forecast on Monday, May, 23: exchange rate 1.0498 Dollars, maximum 1.0655, minimum 1.0341. Euro to Dollar forecast on Tuesday, May, 24: exchange rate 1.0521 Dollars, maximum 1.0679, minimum 1.0363. EUR to USD forecast on Wednesday, May, 25: exchange rate 1.0552 Dollars, maximum 1.0710, minimum 1.0394.

 

In 1 week, Euro to Dollar forecast on Thursday, May, 19: exchange rate 1.0413 Dollars, maximum 1.0569, minimum 1.0257. EUR to USD forecast on Friday, May, 20: exchange rate 1.0513 Dollars, maximum 1.0671, minimum 1.0355. Euro to Dollar forecast on Monday, May, 23: exchange rate 1.0528 Dollars, maximum 1.0686, minimum 1.0370. EUR to USD forecast on Tuesday, May, 24: exchange rate 1.0537 Dollars, maximum 1.0695, minimum 1.0379. Euro to Dollar forecast on Wednesday, May, 25: exchange rate 1.0481 Dollars, maximum 1.0638, minimum 1.0324.

 

 

 

 

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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