Last week, our technical indicators suggested going Long at or below 1.0760, setting a Stop Loss at 1.06, and going Short at or above 1.07780, setting a Stop Loss at 1.08791.

This week, EURUSD price range was 1.0738 high set yesterday, Wednesday, and 1.0617 low set today. So, Monday, we could have bought the currency pair at 1.0655, selling it on an intraday trading at 1.0698, for 0.4% profit. Tuesday, we could have bought it at 1.0675, selling it on an intraday trading at 1.0717, for 0.39% profit. Wednesday, we could have bought it at 1.065, selling it on an intraday trading at 1.0737, for 0.82% profit. Thursday, we could have bought it at 1.0618, selling it on an intraday trading at 1.0664, for an extra 0.43% ROI.

 Fundamental Overview

After rising to a fresh six-day high of 1.0738 in the American session on Wednesday, EURUSD reversed its direction and closed the day below 1.0700. The pair extended its slide to a fresh multi-month low of 1.0617 in the Asian session on Thursday before recovering back above 1.0650.

The renewed US Dollar (USD) strength following the Federal Reserve’s (Fed) policy announcements weighed heavily on EURUSD. Although the Fed left the policy rate unchanged at 5.25%-5.5% as expected, the revised Summary of Economic Projections (SEP) revealed that the US central bank was on track to hike the policy rate by another 25 basis points before the end of the year. Furthermore, the projection for a total of 100 bps rate cuts in 2024 in June’s SEP got revised lower to 50 bps in September, highlighting policymakers’ willingness to keep the policy rate higher for longer.

In turn, the benchmark 10-year US Treasury bond yield climbed to its strongest level since 2007 near 4.45% and the USD Index touched a six-month-high of 105.68.

Early Thursday, hawkish comments from European Central Bank (ECB) officials helped the Euro stay resilient against the USD.

ECB policymaker Gabriel Makhlouf said that a further rate hike was still possible and added that there was a little chance of a rate cut before March 2024. Similarly, policymaker Martins Kazaks argued that mid-2024 rate cut expectations were too early, given the current outlook.

In the second half of the day, weekly Initial Jobless Claims data will be featured in the US economic docket. Investors will also pay close attention to the performance of major equity indexes in the US. Following a bullish opening, the S&P 500 Index lost nearly 1% on Wednesday as investors reacted to the hawkish Fed dot plot. In case US stocks manage to stage a rebound after the opening bell, the USD could have a hard time preserving its strength and help EURUSD edge higher.

Technical Analysis

EURUSD was last seen trading in the upper-half of the descending regression channel.

Meanwhile, the Relative Strength Index (RSI) indicator on the four-hour chart stays slightly above 40, suggesting that the bearish bias stays intact, with a potential of a technical correction in the short term.

On the upside, 1.0670 (20-period Simple Moving Average (SMA), upper-limit of the descending channel) aligns as immediate resistance before 1.0700 (psychological level, static level, 50-period SMA). A four-hour close above the latter could attract buyers and open the door for an extended recovery toward 1.0740 (100-period SMA).

1.0630 (static level, mid-point of the descending channel) aligns as key support level. In case EURUSD falls below that level and starts using it as resistance, 1.0600 (psychological level, static level, lower-limit of the descending channel) and 1.0540 (static level from March) could be set as next bearish targets.

For next week, as illustrated in the following EURUSD 4-hour chart, an ongoing distribution is in progress, going into FOMC. Currently, the currency pair is in neutral trading zone, so no trades are recommended. Instead, it is recommended to wait for the FOMC data, dust settles, and then get ready to re-short EURUSD from overhead resistance.

EURUSD ongoing correction/downtrend is set to resume after distribution pattern

completes at later stage. In the short-run, we are expecting more upside in the EURUSD before reversal / rejection from overhead resistance near 0750/0775 premium prices. Bears should focus on short selling from resistance. Strong prior downtrend unlikely to reverse, unless we get a strong upside breakout above 0780/0790, which will invalidate the bearish outlook mid-term.

As a recommended strategy for the EURUSD, technical analysis are suggesting to short sell rips/rallies and short the currency pair from overhead resistance closer to 0750/0775, SL fixed at 0790, TP1 +50 pips TP2 +100 pips. Keeping in mind this is a swing trade setup, so naturally more patience required, as we are currently locked in tight range into the distribution stage.

Hence, our technical analysis are suggesting going Long at or below 1.0662, setting a Stop Loss at 1.06, and going Short at or above 1.06625, setting a Stop Loss at 1.07753.

As of 11:19 AM (GMT+1), the EURUSD was trading at 1.06526.

EUR to USD forecast for tomorrow Euro to US Dollar forecast on Friday, September, 22: exchange rate 1.065 US Dollars, maximum 1.081, minimum 1.049. EUR to USD forecast on Monday, September, 25: exchange rate 1.064 US Dollars, maximum 1.080, minimum 1.048. Euro to US Dollar forecast on Tuesday, September, 26: exchange rate 1.067 US Dollars, maximum 1.083, minimum 1.051. EUR to USD forecast on Wednesday, September, 27: exchange rate 1.069 US Dollars, maximum 1.085, minimum 1.053.

In 1 week, Euro to US Dollar forecast on Thursday, September, 28: exchange rate 1.060 US Dollars, maximum 1.076, minimum 1.044. EUR to USD forecast on Friday, September, 29: exchange rate 1.057 US Dollars, maximum 1.073, minimum 1.041. Euro to US Dollar forecast on Monday, October, 2: exchange rate 1.058 US Dollars, maximum 1.074, minimum 1.042. EUR to USD forecast on Tuesday, October, 3: exchange rate 1.063 US Dollars, maximum 1.079, minimum 1.047. Euro to US Dollar forecast on Wednesday, October, 4: exchange rate 1.063 US Dollars, maximum 1.079, minimum 1.047.

Until next article, wishing all of you wealthy trading!

 

 

 

 

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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