Last week, our technical indicators suggested going Long at or below 1.08900 setting a Stop Loss at 1.0730, and going Short at or above 1.09, setting a Stop Loss at 1.10.
This week, the EURUSD price range was 1.0904 high, set this past Monday, and 1.0826 low, set yesterday, Wednesday. So, on Monday, we could have bought the currency pair at 1.00873, selling it on an intraday trading at 1.0903, for 0.28% profit. Also, on Monday, we could have short it at 1.0903, covering it on an intraday trading at 1.0873, for 0.28% profit. Tuesday, we could have bought it at 1.0844, selling it on an intraday trading at 1.0897, for 0.49% profit. Wednesday, we could have it at 1.0827, selling it on an intraday trading at 1.0867, for 0.37% profit. Thursday, we could have bought it at 1.0829, selling it on an intraday trading at 1.0858, for an extra 0.27% ROI.
Fundamental Overview
The EURUSD struggles to gain traction and trades below 1.0850 in the early European session on Thursday after closing the second consecutive day in negative territory on Wednesday. The near-term technical outlook shows that the bearish bias remains intact.
The People’s Bank of China (PBOC), China’s central bank, unexpectedly announced on Thursday that it cut the one-year Medium-term Lending Facility (MLF) rate from 2.50% to 2.30%. Following the decision to lower the one-year and five-year Loan Prime Rates by 10 basis points earlier in the week, this development revived concerns over the Chinese economic outlook.
In response, markets have adopted a risk-averse stance on Thursday. At the time of press, the Euro Stoxx 50 Index was down more than 1.5%. Although the US Dollar (USD) seems to be struggling to benefit from safe-haven flows so far, EURUSD could still have a difficult time gaining traction unless the market mood improves in the second half of the day.
In the early American session, the US Bureau of Economic Analysis (BEA) will release its first estimate of the second-quarter Gross Domestic Product (GDP) growth. The US economy is forecast to expand at an annual rate of 2% following the 1.4% growth recorded in the first quarter. A positive surprise in the headline GDP reading could provide a boost to the USD with the immediate reaction. On the other hand, a weaker-than-expected growth print could hurt the USD. Investors will also pay close attention to the quarterly core Personal Consumption Expenditures Price Index data, that will be included in the GDP report.
Technical Analysis
EUR/USD holds gains near 1.0850 ahead of US Q2 GDP data
EUR/USD is trading on the front foot near 1.0850 in the European session on Thursday. The pair shrugs off a risk-off market mood and dismal German IFO data, finding support from the US Dollar’s weakness. Traders now look to US Q2 GDP data for fresh directives.
The EURUSD rose above the 100-period Simple Moving Average (SMA) on the 4-hour chart but failed to hold above this level. Additionally, the Relative Strength Index (RSI) indicator started to edge lower after recovering to 40, reflecting buyers’ hesitancy.
On the downside, supports could be seen at 1.0810 (Fibonacci 50% retracement), 1.0790-1.0780 (200-period SMA, Fibonacci 61.8% retracement) and 1.0740 (Fibonacci 78.6% retracement). In case EUR/USD rises above 1.0850 (100-period SMA) and starts using that level as support, it could extend its recover toward 1.0880 (Fibonacci 23.6% retracement) of the latest downtrend and 1.0900 (psychological level, static level).
For next week, in the following chart, the currency pair price is in wave “3” of the higher order and wave “3” of the lower wave, in the following chart. This means that the probability of an upward movement is strongly increasing. We expect a small correction to the area of 1.08696, then an upward movement to the resistance area of 1.09800.
Hence, our technical analysis is suggesting going Long at or below 1.08696, setting a Stop Loss at 1.075, and going Short at or above 1.08697, setting a Stop Loss at 1.098.
As of 13:35 PM (GMT+1), the EURUSD was trading at 1.08370.
EUR to USD forecast for tomorrow Euro to US Dollar forecast on Friday, July, 26: exchange rate 1.083 US Dollars, maximum 1.099, minimum 1.067. EUR to USD forecast on Monday, July, 29: exchange rate 1.079 US Dollars, maximum 1.095, minimum 1.063. Euro to US Dollar forecast on Tuesday, July, 30: exchange rate 1.080 US Dollars, maximum 1.096, minimum 1.064. EUR to USD forecast on Wednesday, July, 31: exchange rate 1.079 US Dollars, maximum 1.095, minimum 1.063.
In 1 week, Euro to US Dollar forecast on Thursday, August, 1: exchange rate 1.075 US Dollars, maximum 1.091, minimum 1.059. EUR to USD forecast on Friday, August, 2: exchange rate 1.079 US Dollars, maximum 1.095, minimum 1.063. Euro to US Dollar forecast on Monday, August, 5: exchange rate 1.079 US Dollars, maximum 1.095, minimum 1.063. EUR to USD forecast on Tuesday, August, 6: exchange rate 1.078 US Dollars, maximum 1.094, minimum 1.062. Euro to US Dollar forecast on Wednesday, August, 7: exchange rate 1.082 US Dollars, maximum 1.098, minimum 1.066.
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.
