Forex Forecast: 26 – 30/10/2020
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 to short the EURUSD between 1.17 and 1.165, setting a stop loss at 1.18. The EURUSD range for this week was between 1.1882 and 1.1703. Hence, there was no opportunity to enter a short position.
The EURUSD pair advanced for the fourth consecutive session on Wednesday and shot to five-week tops, around the 1.1880 region on the back of some heavy selling around the US dollar. News that the US President Donald Trump was willing to accept a large aid bill raised hopes for a pre-election stimulus breakthrough. This, in turn, helped boost investors’ confidence and undermined demand for the safe-haven greenback.
Meanwhile, prospects for more government borrowing sparked a selloff in the US Treasuries and pushed the yield on the benchmark 10-year government bond to over four-month tops. The lack of demand for government debt exerted some additional downward pressure on the buck. Even growing market concerns that the second wave of coronavirus infections could hinder the global economic recovery did little to provide any respite to the USD bulls.
Investors remain sceptic that any package can actually pass through the Republican-controlled Senate before the November 3 election. The stimulus optimism already seems to have faded as there remains a strong opposition from within Trump’s own Republican Party. Adding to this, Trump on Wednesday accused Democrats of being unwilling to craft an acceptable compromise on stimulus. The slow pace of US stimulus talks added to uncertainty about the US economic outlook and took its toll on the global risk sentiment.
This was evident from a fresh leg down in the equity markets, which helped revive the USD demand. This, coupled with dovish ECB expectations, prompted some selling around the major during the Asian session on Thursday. Market participants now look forward to the release of the German Gfk Consumer Confidence for some impetus. The US economic docket features the release of the usual Initial Weekly Jobless Claims. The key focus, however, will be on developments surrounding the US fiscal stimulus, which might continue to infuse some volatility in the financial markets.
The EURUSD is under some pressure below 1.1850 the anti-risk dollar is drawing haven bids on reports of meddling in US elections and fading prospects of an imminent US stimulus deal. US jobless claims beat expectations, down to 787K
From a technical perspective, the pair struggled to find acceptance above the 61.8% Fibonacci level of the 1.2011-1.1612 downfall and witness a modest pullback from the 1.1880-90 congestion zone. This makes it prudent to wait for some strong follow-through buying beyond the mentioned hurdle before positioning for any further appreciating move.
A sustained move back above the 1.1900 mark will be seen as a fresh trigger for bullish traders and set the stage for a move back towards reclaiming the key 1.2000 psychological mark.
On the flip side, any subsequent slide is likely to find decent support near the 50% Fibo. level, around the 1.1815 region. This is closely followed by a confluence resistance breakpoint, around the 1.1800 mark, comprising of 50-day SMA and a near six-week-old descending trend-line.
Failure to defend the mentioned support levels might prompt some technical selling and accelerate the slide towards the next major support near the 1.1765-60 horizontal zone. The downward trajectory could further get extended to 23.6% Fibo. level, around the 1.1700 mark, which if broken decisively will negate any near-term positive bias. The pair might then turn vulnerable to aim back to retest September monthly swing lows, around the 1.1615-10 region.
For next week and as illustrated in the following EURUSD 4-hour chart, technical indicators turned bullish. For next week our technical indicators are suggesting to go long on the currency pair at or below 1.1780, and shorting it at or above 1.19.
As of 4:46 PM (GMT+1), the EURUSD was trading at 1.18287.
EUR to USD forecast for tomorrow, Euro to Dollar forecast on Friday, October, 23: exchange rate 1.1924 Dollars, maximum 1.2103, minimum 1.1745. EUR to USD forecast on Monday, October, 26: exchange rate 1.1969 Dollars, maximum 1.2149, minimum 1.1789. Euro to Dollar forecast on Tuesday, October, 27: exchange rate 1.2033 Dollars, maximum 1.2213, minimum 1.1853. EUR to USD forecast on Wednesday, October, 28: exchange rate 1.2058 Dollars, maximum 1.2239, minimum 1.1877.
In 1 week, In 1 week Euro to Dollar forecast on Thursday, October, 29: exchange rate 1.2000 Dollars, maximum 1.2180, minimum 1.1820. EUR to USD forecast on Friday, October, 30: exchange rate 1.2022 Dollars, maximum 1.2202, minimum 1.1842. Euro to Dollar forecast on Monday, November, 2: exchange rate 1.1942 Dollars, maximum 1.2121, minimum 1.1763. EUR to USD forecast on Tuesday, November, 3: exchange rate 1.1928 Dollars, maximum 1.2107, minimum 1.1749. Euro to Dollar forecast on Wednesday, November, 4: exchange rate 1.2002 Dollars, maximum 1.2182, minimum 1.1822.
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 future performance of the EUR/USD.