Forex Forecast: 27 February – 3 March 2023
Last week, our technical indicators suggested going Short at or above 1.07585, setting a Stop Loss at 1.08, and going Long at or below 1.06966, setting a Stop Loss at 1.0550.
This week, EURUSD price range was 1.0704 high set this past Monday, and 1.0599 low set yesterday, Wednesday. So, Monday, we could have bought the currency pair at 1.0673, selling it on an intraday trading at 1.0702, for 0.27% profit. Tuesday, we could have bought it at 1.064, selling it on an intraday trading at 1.0696, for 0.53% profit. Wednesday, we could have bought it at 1.0601, selling it on an intraday trading at 1.0662, for 0.58% profit. Today, we could have bought it at 1.0607, selling it on an intraday trading at 1.0626, for an extra 0.18% ROI.
EURUSD has edged slightly higher during the Asian trading hours on Thursday after having touched its lowest level since early January on Wednesday. The pair manages to hold above 1.0600 for now and it could stage a technical correction in case risk flows return in the second half of the day.
The minutes of the FOMC’s first meeting of the year reminded investors of policymakers’ willingness to continue to raise rates to achieve the 2% inflation objective and acknowledged that a few members advocated for a 50 basis points hike. The publication also showed that all participants favored further reductions in the balance sheet under the current plan.
The confirmation of Fed’s hawkishness helped the US Dollar preserve its strength in the second half of the day on Wednesday and forced EURUSD to stay on the back foot.
On Thursday, the US Bureau of Economic Analysis will release its second estimate of the fourth-quarter Gross Domestic Product growth, which is expected to match the initial estimate of 2.9% (YoY). Weekly Initial Jobless Claims and the Federal Reserve Bank of Chicago’s National Activity Index will also be featured in the US economic docket. Unless there is a significant increase in jobless claims, which could weigh on the US Dollar (USD), the market reaction to these data is likely to be muted. Instead, market participants will pay close attention to risk perception. Despite the FOMC Minutes’ relatively hawkish, Wall Street’s main indexes closed mixed on Wednesday. Early Thursday, US stock index futures are up between 0.3% and 0.7%. If there is a decisive rebound in US stocks following the opening bell, USD could lose interest and help EURUSD edge higher and vice versa.
Meanwhile, EU members will have more talks on the new sanction package against Russia after having failed to reach an agreement on Wednesday. According to Reuters, the proposed package includes trade curbs worth more than €10 billion. Russia is reportedly planning to cut oil output in response to western sanctions. Heightened risk of rising energy prices feeding into stronger inflation in the Eurozone could help the Euro hold its ground in the short term as such a development would force the European Central Bank (ECB) to continue to raise rates after March.
EURUSD clings to recovery gains above 1.0600 ahead of Eurozone inflation. Investors remain on the edge amid hawkish Fed and ECB rate hike expectations, awaiting a fresh batch of the Eurozone and US economic data for a fresh trading direction.
EURUSD trades within the descending regression channel coming from early February and the Relative Strength Index (RSI) indicator on the four-hour chart stays below 50, suggesting that the bearish bias stays intact.
Nevertheless, the pair seems to have met support at 1.0600 (psychological level, mid-point of the descending channel). In case sellers fail to reclaim that level, an extended correction toward 1.0660 (upper-limit of the descending channel, 20-period Simple Moving Average), 1.0680 (50-period SMA) and 1.0700 (psychological level, static level) could be witnessed.
On the downside, a four-hour close below 1.0600 could trigger another leg lower toward 1.0570 (static level from December) and 1.0550 (lower-limit of the descending channel).
For next week, EURUSD has reached a suitable support zone and it is low risk for buying. On the other hand, we do not expect further growth of the dollar index , so in the specified zone, you can enter a buying position.
Hence, our technical analysis are suggesting going Long at or below 1.08, setting a Stop Loss at 1.05252, and going Short at or above 1.09, setting a Stop Loss at1.11903.
As of 10:34 AM (GMT), the EURUSD was trading at 1.05922.
EUR to USD forecast for tomorrow: Euro to Dollar forecast on Friday, February, 24: exchange rate 1.0569 Dollars, maximum 1.0728, minimum 1.0410. EUR to USD forecast on Monday, February, 27: exchange rate 1.0534 Dollars, maximum 1.0692, minimum 1.0376. Euro to Dollar forecast on Tuesday, February, 28: exchange rate 1.0525 Dollars, maximum 1.0683, minimum 1.0367. EUR to USD forecast on Wednesday, March, 1: exchange rate 1.0551 Dollars, maximum 1.0709, minimum 1.0393.
In 1 week, Euro to Dollar forecast on Thursday, March, 2: exchange rate 1.0530 Dollars, maximum 1.0688, minimum 1.0372. EUR to USD forecast on Friday, March, 3: exchange rate 1.0486 Dollars, maximum 1.0643, minimum 1.0329. Euro to Dollar forecast on Monday, March, 6: exchange rate 1.0493 Dollars, maximum 1.0650, minimum 1.0336. EUR to USD forecast on Tuesday, March, 7: exchange rate 1.0541 Dollars, maximum 1.0699, minimum 1.0383. Euro to Dollar forecast on Wednesday, March, 8: exchange rate 1.0478 Dollars, maximum 1.0635, minimum 1.0321.
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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