Forex Forecast: 24 – 28 October 2022
EURUSD Rates Week in Review
Last week, our technical indicators suggested to go Short on the currency pair at or above 0.97183, setting a Stop loss at 0.98, and Buy it at or below 0.97, setting a Stop loss at 0.955.
This week, EURUSD price range was 0.9836 high, set today, Thursday, and 0.9719 low, set this past Monday. So, Monday, we could have short the currency pair at 0.9851, covering it on an intraday trading at 0.9721, for 1.32% profit. Tuesday, we could have short it at 0.9874, covering it on an intraday trading at 0.9814, for 0612% profit. Wednesday, we could have short it at 0.971, covering it on an intraday trading at 0.9755, for 0.46% profit. Thursday, we could have short it at 0.9834, covering it on an intraday trading at 0.9757, for an extra 0.78% ROI.
The EURUSD pair attracts some buying in the vicinity of mid-0.9700s or a three-day low touched earlier this Thursday and recovers a part of the previous day’s heavy losses.
The pair trades with modest gains through the early European session and draws support from a modest US dollar downtick. Headlines that China is considering cutting the quarantine period for inbound travellers from 10 days to 7 provide a much-needed respite. This led to an intraday recovery in the risk sentiment, which, in turn, prompts some selling around the safe-haven greenback.
Furthermore, rising bets for a third straight 75 bps interest-rate hike by the European Central Bank at the next policy meeting on October 27 underpins the shared currency. The bets were reaffirmed by the final Eurozone Harmonised Index of Consumer Prices (HICP) Index released on Wednesday, which tapped a 40-year high and surged to 9.9% YoY in September.
The EURUSD pair, however, lacks bullish conviction and so far, has been struggling to gain any meaningful traction amid fears of more aggressive moves by the Federal Reserve and looming recession risks.
The recent hawkish Fed rhetoric reaffirmed expectations that the US central bank will continue to hike interest rates at a faster pace to combat stubbornly high inflation. In fact, Chicago Fed President Charles Evans, Minneapolis Fed President Neel Kashkari and St. Louis Fed President James Bullard reiterated the commitment to bring inflation under control.
This, in turn, pushes the yield on the rate-sensitive 2-year US government bond to a new 15-year peak and the benchmark 10-year Treasury note to its highest level since the 2008 financial crisis.
Investors, meanwhile, remain worried about economic headwinds stemming from rapidly rising borrowing costs and the protracted Russia-Ukraine war.
Concerns about a deeper global economic downturn should keep a lid on any optimistic move in the markets and also offer some support to the safe-haven buck. This, in turn, warrants caution before positioning for any meaningful upside for the EURUSD pair.
Traders now look to the US macro data – the Philly Fed Manufacturing Index, Weekly Initial Jobless Claims and Existing Home Sales data – for a fresh impetus.
EURUSD is advancing above 0.9800 heading towards the US open. The US dollar extends losses amid an improvement in the market mood. Positive Treasury yields could cap the gains in the main currency pair.
From a technical perspective, the overnight downfall reaffirms a resistance marked by the top end of a symmetrical triangle, which constitutes the formation of a bearish pennant on the daily chart.
The said barrier, currently around the 0.9860-0.9865 area, should now act as a pivotal point and help determine the next leg of a directional move for the EURUSD pair. A sustained strength beyond has the potential to lift spot prices beyond the 0.9900 mar, towards the 50-day SMA, around the 0.9920-0.9925 area. Some follow-through buying will negate the bearish set-up and pave the way for additional gains.
On the flip side, the Asian session low, around the 0.9755 area, could act as immediate support ahead of the 0.9730-0.9725 region and the 0.9700 mark. The latter near the symmetrical triangle support, which if broken decisive will confirm a near-term negative bias. The EURUSD pair might then accelerate the fall towards the 0.9630 region en route to the 0.9600 mark.
Spot prices could eventually drop to challenge a two-decade low, around the 0.9535 region touched in September.
For next week, our technical analysis are suggesting lower prices for the currency pair, which movement could even breakout the support line, pushing EURUSD price even lower, setting new targets at $0.97100, and $0.96400. Hence, our technical analysis are suggesting to go Short on the EURUSD at 0.97500, setting a Stop Loss at 0.98600, and t go Long at 0.97800, setting a Stop Loss at 0.96400.
As of 2:30 PM (GMT+1), the EURUSD was trading at 0.97919.
EUR to USD forecast for tomorrow: Euro to Dollar forecast on Friday, October, 21: exchange rate 0.9691 Dollars, maximum 0.9836, minimum 0.9546. EUR to USD forecast on Monday, October, 24: exchange rate 0.9707 Dollars, maximum 0.9853, minimum 0.9561. Euro to Dollar forecast on Tuesday, October, 25: exchange rate 0.9831 Dollars, maximum 0.9978, minimum 0.9684. EUR to USD forecast on Wednesday, October, 26: exchange rate 0.9775 Dollars, maximum 0.9922, minimum 0.9628.
In 1 week, Euro to Dollar forecast on Thursday, October, 27: exchange rate 0.9844 Dollars, maximum 0.9992, minimum 0.9696. EUR to USD forecast on Friday, October, 28: exchange rate 0.9849 Dollars, maximum 0.9997, minimum 0.9701. Euro to Dollar forecast on Monday, October, 31: exchange rate 0.9849 Dollars, maximum 0.9997, minimum 0.9701. EUR to USD forecast on Tuesday, November, 1: exchange rate 0.9812 Dollars, maximum 0.9959, minimum 0.9665. Euro to Dollar forecast on Wednesday, November, 2: exchange rate 0.9761 Dollars, maximum 0.9907, minimum 0.9615.
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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