Forex Forecast: 24 – 28 May 2021

 

EURUSD Rates Week in Review

Last week, our technical indicators suggested to go Long on the EURUSD at or below 1.20711, setting a stop loss at 1.20, and Short it at or above 1.2165, setting a stop loss at 1.22.

This week, EURUSD price range was 1.2246 high, set yesterday, Wednesday, and 1.22126 low, set this past Monday. Hence, on Monday, we could have Short the currency pair at 1.2168, buying it back on an intraday trading at 1.2128, for 0.33% profit. Tuesday, we could have short  it at 1.2198, covering it on an intraday trading at 1.2149, for 0.4% profit. Wednesday, we could have short it at 1.2198, covering it on an intraday trading at 1.2171, for 0.22%  and today, Thursday, we could have short it at 1.2198, covering it on an intraday trading at 1.2167, for an extra 0.25% profit.

 Fundamental Overview

A small spark can start a wildfire, as cryptocurrency traders have experienced on Wednesday, and the subtlest of hints from the Federal Reserve about reducing some of its support pushed the dollar higher. Meeting minutes from the world´s most powerful central bank seemed to serve as a baby step toward tapering down the pace of bond buys. However, the exact wording is worth reexamining, bolding added:

“A number of participants suggested that if the economy continued to make rapid progress toward the Committee’s goals, it might be appropriate at some point in upcoming meetings to begin discussing a plan for adjusting the pace of asset purchases”.

It does not get more conditional and limited than the long wording above. Investors had already known the Dallas Fed President Robert Kaplan stands out in his desire for a quicker reduction of dollar printing, currently at $120 billion/month and a rate hike to come sooner rather than later. He is probably not alone.

Nevertheless, Kaplan and other hawks remain in a minority as the minutes show and as recent speeches from Fed officials also demonstrate. Atlanta Fed President Raphael Bostic reiterated the mantra that the economy has a long way to go. His colleagues such as Vice-Chair Richard Clarida conveyed the same message earlier in the week.

Markets may rethink the perceived hawkishness coming from the minutes and push the dollar back down, thus boosting EURUSD. Weekly jobless claims are eyed on Thursday, with economists expecting another decline from 473,000 reported last week. The Philly Fed Manufacturing Index is also eyed.

The second reason to expect EURUSD to rise comes from the old continent. Europe’s vaccination campaign continues at full force and is bearing more and more fruits. After Parisian cafes reopened, at least outdoors, tourism is also getting a shot in the arm after member states agreed to loosen restrictions.

Every day that passes brings another report of falling COVID-19 cases and a rising share of the population getting the jab. European Central Bank President Christine Lagarde is set to speak later in the day and may acknowledge the improving situation.

 Overall, EURUSD has reasons to recover and rise.

 Technical Analysis

EURUSD is trading closer to 1.22, recovering from the Fed’s meeting minutes which included the subtlest of hints toward tapering bond buys. The better market mood is weighing on the dollar. A speech by ECB President Lagarde and jobless claims await traders.

 

Eurodollar continues benefiting from upside momentum, according to the above four-hour chart, despite the recent decline and maintains a safe distance from the 50, 100 and 200 Simple Moving Averages.

The Relative Strength Index has dropped well below 70, thus far from overbought conditions. Overall, bulls are in control.

Some resistance awaits at 1.22, which is a psychological barrier. It is followed by the all-important 1.2245, which capped EUR/USD this week and in February. Further above, 1.2280 and 1.2350 await bulls.

Support is at 1.2180, May’s previous high point, then followed by 1.2150, 1.2105 and 1.2075.

 For next week, EURUSD is approaching the key level of 1.2250. Currently, there is no hint
of bearish price action. So, sellers might want to switch to the lower time frames and look for bearish price action.

If bearish PA happens at this key level, then there is a good chance of a pullback to 1.21 level.

 

Note that, in case price breaks out strongly from the current 1.2250 level, then the next key level is near 1.24. So, sell only if there are formation of bearish candlesticks in the resistance level, which is what our technical indicators are expecting and suggesting to go Long on the EURUSD at or below 1.2050, setting a stop loss at 1.19, and Short it at or above 1.21978, setting a stop loss at 1.2240.

As of 11:57 AM (GMT+1), the EURUSD was trading at 1.21945

 

EUR to USD forecast for tomorrow:  Euro to Dollar forecast on Friday, May, 21: exchange rate 1.2131 Dollars, maximum 1.2313, minimum 1.1949. EUR to USD forecast on Monday, May, 24: exchange rate 1.2200 Dollars, maximum 1.2383, minimum 1.2017. Euro to Dollar forecast on Tuesday, May, 25: exchange rate 1.2214 Dollars, maximum 1.2397, minimum 1.2031. EUR to USD forecast on Wednesday, May, 26: exchange rate 1.2281 Dollars, maximum 1.2465, minimum 1.2097.

 

In 1 week, Euro to Dollar forecast on Thursday, May, 27: exchange rate 1.2281 Dollars, maximum 1.2465, minimum 1.2097. EUR to USD forecast on Friday, May, 28: exchange rate 1.2206 Dollars, maximum 1.2389, minimum 1.2023. Euro to Dollar forecast on Monday, May, 31: exchange rate 1.2223 Dollars, maximum 1.2406, minimum 1.2040. EUR to USD forecast on Tuesday, June, 1: exchange rate 1.2192 Dollars, maximum 1.2375, minimum 1.2009. Euro to Dollar forecast on Wednesday, June, 2: exchange rate 1.2294 Dollars, maximum 1.2478, minimum 1.2110.

 

 

 

 

 

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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