Forex Forecast: 25 – 29 July 2022
EURUSD Rates Week in Review
Last week, our technical indicators suggested to go Short on EURUSD at or above 1.0150, setting a Stop Loss at 1.03081, and to go Long at or below 1.02, setting a Stop Loss at 0.9850.
This week, EURUSD price range was 1.0274 high, set yesterday, Wednesday, and 1.078 low, set this past Monday. So, Monday, we could have short the currency pair at 1.02, Covering it on an intraday trading at 1.008, for 1.18% profit. Also Monday, we could have bought it at 1.008, selling it on an intraday trading at 1.0268, for 1.87% profit. Tuesday, we could have Short the currency pair at 1.02, Covering it on an intraday trading at 1.0122 for 0.76% profit. Also Tuesday, we could have bought it at 1.0122, selling it on an intraday trading at 1.0268, for 1.44% profit. Wednesday, we could have bought it at 1.0157, selling it on an intraday trading at 1.0272, for 1.13% profit. Also Wednesday, we could have Short it at 1.02, Covering it on an intraday trading at 1.0157, for 0.42% profit. Thursday, we could have bought it at 1.0168, selling it on an intraday trading at 1.10228, for 0.59% profit. Also Thursday, we could have Short it at 1.02, Covering it on an intraday trading at 1.0168, for an extra 0.31% ROI. Indeed, a very profitable week on this currency pair, for day traders.
Fundamental Overview
After having snapped a three-day losing streak on Wednesday, EURUSD has gone into a consolidation phase below 1.0200 early Thursday. Unless the European Central Bank (ECB) hikes the policy rate by 50 basis points and convinces investors of its commitment to battle inflation, the shared currency could find it difficult to stay resilient against the dollar.
Although the market consensus points to a 25 bps ECB hike, reports from earlier in the week revived hopes for a double-dose rate increase. At this point, it would be a dovish surprise if the ECB were to opt for a 25 bps hike. Some experts think that the bank could refrain from raising key rates by 50 bps if it fails to finalize the details of the new anti-fragmentation tool. In this scenario, the euro is likely to face significant selling pressure.
On the other hand, a 50 bps rate hike coupled with the announcement of the new ECB tool should help EURUSD regather bullish momentum. In order for the pair to stage a steady uptrend, however, market participants may want to see the bank commit to one more 50 bps hike in September.
Later in the day, the weekly Initial Jobless Claims and the Federal Reserve Bank of Philadelphia’s Manufacturing Survey will be featured in the US economic docket. Nevertheless, these data are unlikely to trigger a noticeable market reaction with ECB President Christine Lagarde speaking on the policy outlook around the same time.
Technical Analysis
EURUSD is consolidating gains above 1.0200, supported by news that Russia’s Nord Stream 1 pipeline has resumed gas deliveries. The renewed US dollar sell-off also underpins the pair. The upside, however, remains capped by the Italian political crisis.
On the downside, 1.0170 (Fibonacci 38.2% retracement of the latest downtrend) aligns as first support ahead of 1.0100 (psychological level, Fibonacci 23.6% retracement, 50-period SMA on the four-hour chart). In case the latter fails, the pair, once again, could test parity.
Resistances are located at 1.0200 (psychological level), 1.0220 (Fibonacci 50% retracement, 100-period SMA) and 1.0270 (Fibonacci 61.8% retracement).
For next week, EURUSD, potential short setup is getting ready! The currency pair is trading in a down trend. The price has broken a major level of a 7 years trading range. However, the price has bounced from the send leg down, as a pull back. Bears seem to be waiting for bulls to give up on the trend pressure.
Hence, our technical analysis are suggesting to go Short at or above 1.01912, setting a Stop Loss at 1.03499, and to go Long at or below 1.01, setting a Stop Loss at 0.98.
As of 12:44 PM (GMT), the EURUSD was trading at 1.01857.
EUR to USD forecast for tomorrow: Euro to Dollar forecast on Friday, July, 22: exchange rate 1.0133 Dollars, maximum 1.0285, minimum 0.9981. EUR to USD forecast on Monday, July, 25: exchange rate 1.0214 Dollars, maximum 1.0367, minimum 1.0061. Euro to Dollar forecast on Tuesday, July, 26: exchange rate 1.0277 Dollars, maximum 1.0431, minimum 1.0123. EUR to USD forecast on Wednesday, July, 27: exchange rate 1.0341 Dollars, maximum 1.0496, minimum 1.0186.
In 1 week, Euro to Dollar forecast on Thursday, July, 28: exchange rate 1.0306 Dollars, maximum 1.0461, minimum 1.0151. EUR to USD forecast on Friday, July, 29: exchange rate 1.0329 Dollars, maximum 1.0484, minimum 1.0174. Euro to Dollar forecast on Monday, August, 1: exchange rate 1.0326 Dollars, maximum 1.0481, minimum 1.0171. EUR to USD forecast on Tuesday, August, 2: exchange rate 1.0183 Dollars, maximum 1.0336, minimum 1.0030. Euro to Dollar forecast on Wednesday, August, 3: exchange rate 1.0195 Dollars, maximum 1.0348, minimum 1.0042.
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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