Forex Forecast: 25 – 29 January 2021
EURUSD Rates Week in Review
Last week, our technical indicators suggested to o buy the EURUSD between 1.20327 and 1.20214, and Short it between 1.23162 and 1.23. Throughout this week, EURUSD has been trading in a price range of 1.2158 high, set yesterday, Wednesday, and 1.2054 low, set this past Monday. So, if we have kept our trading disciplinee, there was no trading opportunity for longs and shorts this week.
The central bank is widely expected to keep the interest rate and the asset purchase program unchanged, having partly boosted the level of policy accommodation until early 2022 in December. However, the possibility of the central bank jawboning the currency cannot be ruled out.
The stronger euro got attention from policymakers in December. “Concerns were voiced over risks related to developments in the exchange rate that might have negative consequences for the inflation outlook,” ECB’s December revealed said. The minutes also took note of the euro’s record nominal effective exchange rate and its disinflationary impact. Besides, the Eurozone economy is facing the risk of recession due to the worsening coronavirus situation and political tensions in Italy and other nations.
EURUSD holds onto gains above 1.21, having witnessed a bull market pullback ahead of ECB’s rate decision. The central bank is expected to maintain the status quo on interest rates and bond purchases but may attempt to talk down the euro, with the economy facing recession risk.
EURUSD may probe the recent low of 1.2053, if the central bank uses strong words, while noting the unwanted effects of the euro’s strength. “The strong euro is a problem, but keeping the door open to more asset purchases if there’s further economic weakness could in many ways achieve the same goal of easing demand for the currency.” BK Asset Management’s Kathy Lien noted.
Technical level trends, daily SMA 20 is at 1.2199, SMA50 1.2099, SMA100 1.1935, and SMA200 1.1628.
For next week, as illustrated in the following 4-hour EURUSD chart, our technical analysis indicators appoint that is time to resume the downtrend price movement. Price for EURUSD went back up to retest resistance, and it is now rejecting it. Hence, more downside movement in the currency pair is expected in the short-run. For next week, technical indicators suggest to Short the EURUSD at or above 1.21431.
As of 15:44 PM (GMT), the EURUSD was trading at 1.21610.
EUR to USD forecast for tomorrow: Euro to Dollar forecast on Friday, January, 22: exchange rate 1.2094 Dollars, maximum 1.2275, minimum 1.1913. EUR to USD forecast on Monday, January, 25: exchange rate 1.2148 Dollars, maximum 1.2330, minimum 1.1966. Euro to Dollar forecast on Tuesday, January, 26: exchange rate 1.2143 Dollars, maximum 1.2325, minimum 1.1961. EUR to USD forecast on Wednesday, January, 27: exchange rate 1.2073 Dollars, maximum 1.2254, minimum 1.1892.
In 1 week, Euro to Dollar forecast on Thursday, January, 28: exchange rate 1.2067 Dollars, maximum 1.2248, minimum 1.1886. EUR to USD forecast on Friday, January, 29: exchange rate 1.2017 Dollars, maximum 1.2197, minimum 1.1837. Euro to Dollar forecast on Monday, February, 1: exchange rate 1.2071 Dollars, maximum 1.2252, minimum 1.1890. EUR to USD forecast on Tuesday, February, 2: exchange rate 1.2000 Dollars, maximum 1.2180, minimum 1.1820. Euro to Dollar forecast on Wednesday, February, 3: exchange rate 1.1957 Dollars, maximum 1.2136, minimum 1.1778.
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.