Forex Forecast: 29 March – 2 April 2021

 

EURUSD Rates Week in Review

Last week, our technical indicators suggested to Short the currency pair at or above 1.1940, and Long at or below 1.19.  This week, EURUSD price range was 1.1947 high, set this past Monday, and 1.1792 low, set today, Thursday. So, this week, we could have Short the currency pair on Monday at 1.1945 on an intraday trading, buying it back at 1.1873, for 0.6% gain. Tuesday, we could have  Short it at 1.1939, covering it on an intraday trading at 1.1843, for 0.8% profit. Wednesday, we could have initiated a new Long position at 1.1811, selling it on a intraday trading at 1.1852, for 0.35% profit. Today, we could have bought it at 1.1790, selling it today at 1.1826, for an extra 0.31% ROI.

 Fundamental Overview

Easter is around the corner, but it is unlikely to be a happy holiday, even in Germany, where the government backtracked on special restrictions that had been planned. Concerns about rising cases in the old continent and the sluggish vaccine campaign are left, right, and center for EU leaders convening in the next few hours.

If they point fingers at AstraZeneca and the UK and take further steps such as halting shipments of vaccines, pressure on the euro would intensify. On the other hand, a more conciliatory approach, in line with the initial statement about a win-win for both sides would be positive for the common currency.

EURUSD has been under pressure also from flows into the safe-haven dollar. Concerns about Europe and also about disruption to global shipping due to a stranded ship in the Suez Canal have been weighing on sentiment.

The greenback is also benefiting from upbeat figures. US Gross Domestic Product was upgraded from 4.1% to 4.3% annualized in the final read for the fourth quarter of 2020. More importantly, jobless claims dropped to 684,000 in the week ending March, exceeding expectations as well.

Apart from the EU Summit, investors await more details about President Joe Biden’s massive infrastructure plans that will be officially presented last week. If Biden goes big, the dollar has more room to rise. All in all, pressure on EURUSD is set to continue.

 Technical Analysis

EURUSD has dropped below 1.18, hitting a new four-month low. US GDP beat estimates with 4.3% and jobless claims also came out better than projected with 684,000. EU leaders convene virtually to discuss rising covid infections and Europe’s vaccine issues. Talks with the UK continue.

 

The Relative Strength Index on the four-hour chart is just above 30, thus outside the oversold territory. That, alongside downside momentum, is fueling the bears.

The round 1.18 level is critical support and it is followed by 1.1750 and 1.1690, which were in play in November 2020.

Resistance awaits at 1.1836, followed by 1.1875 and 1.19.

 For next week, Investor sentiment towards the Eurozone has been weak, to such an extent that excellent PMI data on Wednesday failed to give the Euro a much-needed boost. On the manufacturing front, France, Germany and the Eurozone all showed strong growth, highlighted by an outstanding German read of 66.6.

Services also showed improvement, although France and the Eurozone remain in contraction territory. German Services PMI improved to 50.8, the first time the index has shown growth in seven months.

The Euro has continued to be under pressure this week over a vaccine dispute with the EU. A shortage of AstraZeneca vaccines across Europe, which has resulted in a threat by the EU to block shipments of the vaccine to the UK. Such a move would likely send tense relations between the EU and the UK to a new low.

The irony of the EU move to hoard vaccines has not been lost in British media, with The Telegraph newspaper publishing a survey, which shows that a majority of people in Germany, France, Italy and Spain consider the AstraZeneca vaccine as unsafe.

EUR has broken below critical support at 1.1840, where the 200-DMA is also situated. If EUR closes below this level, we can expect further losses, with the next support line at 1.1808. If the downturn continues, it could potentially reach as low as the 1.16 level in the coming days, as shown in the following chart. On the upside, 1.1971 has some breathing room in resistance, as EUR loses ground.

Hence, next week our technical indicators are suggesting to initiate a Long position at  or below 1.17, and to Short the currency pair at or above 1.19715. Further, we should start to see some price consolidation on the EURUSD between 1.18 and 1.16.

 

As of 3:18 PM (GMT), the EURUSD was trading at 1.17871.

 

EUR to USD forecast for tomorrow:  Euro to Dollar forecast on Friday, March, 26: exchange rate 1.1783 Dollars, maximum 1.1960, minimum 1.1606. EUR to USD forecast on Monday, March, 29: exchange rate 1.1700 Dollars, maximum 1.1876, minimum 1.1525. Euro to Dollar forecast on Tuesday, March, 30: exchange rate 1.1728 Dollars, maximum 1.1904, minimum 1.1552. EUR to USD forecast on Wednesday, March, 31: exchange rate 1.1717 Dollars, maximum 1.1893, minimum 1.1541.

 

In 1 week, Euro to Dollar forecast on Thursday, April, 1: exchange rate 1.1655 Dollars, maximum 1.1830, minimum 1.1480. EUR to USD forecast on Friday, April, 2: exchange rate 1.1729 Dollars, maximum 1.1905, minimum 1.1553. Euro to Dollar forecast on Monday, April, 5: exchange rate 1.1699 Dollars, maximum 1.1874, minimum 1.1524. EUR to USD forecast on Tuesday, April, 6: exchange rate 1.1677 Dollars, maximum 1.1852, minimum 1.1502. Euro to Dollar forecast on Wednesday, April, 7: exchange rate 1.1651 Dollars, maximum 1.1826, minimum 1.1476.

 

 

 

 

 

 

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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