Forex Forecast: 25 – 29/05/2020
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
Last week, our technical indicators suggested initiating a short position at or above 1.0850, with a stop loss at 1.0875. Monday, so far was the only opportunity throughout this week to short the currency pair at 1.0927 and close the intraday position at 1.0799, with a gain of 1.17%.
The EURUSD pair has spent the first half of this Thursday consolidating just below 1.1000, bottoming during European trading hours at 1.0951. The market’s sentiment has turned sour amid tensions between the US and China. The US blaming China for the ongoing pandemic has triggered measures that further affect global growth.
The country is tightening controls on the use of its technology by Huawei while launching an investigation over the origins of COVID-19. China cut beef imports from Australia and impose punitive tariffs on barley coming from the country, as Australia seconds the investigation. With the current fragility of global economies, the last that’s needed is an escalation in the trade war.
European data has beat expectations, but, according to Markit, the local economy “remained stuck in its deepest downturn ever recorded in May due to ongoing measures taken to control the coronavirus disease 2019 (COVID-19) outbreak.” The preliminary PMIs estimates for the EU showed that the manufacturing index improved from 33.4 to 39.5, while services output rose from 12 to 28.4. In Germany, however, manufacturing output improved by less than anticipated, printing at 36.8.
The pair rose above 1.1000 ahead of the US Initial Jobless Claims for the week ended May 15, which resulted at 2.43 million, slightly worse than the 2.4 million expected. Later, Markit will publish the preliminary estimates of the US PMIs. Both, Services output and Manufacturing output are expected to have bounced, but also to remain well into contraction territory.
EURUSD has dropped below 1.10 as China threatens to retaliate against the US if sanctions are imposed. The safe-haven dollar is gaining ground. Earlier, US figures were mixed.
The EURUSD pair is holding on to gains a few pips above 1.1000, bullish, according to intraday chats. Equities bouncing from their lows add to chances of another leg higher. In the 4-hour chart, technical indicators have resumed their advances, the Momentum firmly above its mid-line and the RSI at overbought levels. The 20 SMA heads firmly higher well below the current level, and above the larger ones. The risk remains skewed to the upside, with a test of 1.1120 on the table for the upcoming sessions.
Support levels are at 1.0965, 1.0920, and 1.0890. Resistance levels are at 1.1010, 1.1050, and 1.1090.
For next week, our technical indicators suggest initiating a short position between 1.09871 and 1.09239, closing the position between 1.084 and 1.08 as illustrated in the following chart. As of today, Thursday at 5:31 PM (GMT+1), the EURUSD was trading at 1.09543.
EUR to USD forecast for tomorrow Euro to Dollar forecast on Friday, May, 22: exchange rate 1.1042 Dollars, maximum 1.1208, minimum 1.0876. EUR to USD forecast on Monday, May, 25: exchange rate 1.1048 Dollars, maximum 1.1214, minimum 1.0882. Euro to Dollar forecast on Tuesday, May, 26: exchange rate 1.1147 Dollars, maximum 1.1314, minimum 1.0980. EUR to USD forecast on Wednesday, May, 27: exchange rate 1.1157 Dollars, maximum 1.1324, minimum 1.0990.
In 1 week, Euro to Dollar forecast on Thursday, May, 28: exchange rate 1.1145 Dollars, maximum 1.1312, minimum 1.0978. EUR to USD forecast on Friday, May, 29: exchange rate 1.1116 Dollars, maximum 1.1283, minimum 1.0949. Euro to Dollar forecast on Monday, June, 1: exchange rate 1.1156 Dollars, maximum 1.1323, minimum 1.0989. EUR to USD forecast on Tuesday, June, 2: exchange rate 1.1125 Dollars, maximum 1.1292, minimum 1.0958. Euro to Dollar forecast on Wednesday, June, 3: exchange rate 1.1133 Dollars, maximum 1.1300, minimum 1.0966.
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.