Forex Forecast: 3 -7 January 2022
EURUSD Rates Week in Review
Last week, our technical indicators suggested to go Long on the currency pair at or below 1.1440, setting a stop loss 1.1280, and to go Short at or above 1.1440, setting a stop loss at 1.15.
This week, EURUSD price range was 1.1370 high, set yesterday, Wednesday, and 1.1273 low, also set this past Wednesday. So, Monday, we could have bought the EURUSD at 1.1304, selling it on an intraday trading at 1.1333, for 0.26% profit. Tuesday, we could have bought it at 1.1287, selling it on an intraday trading at 1.1333, for 0.41% profit. Wednesday, we could have bought it at 1.1271, selling it on an intraday trading at 1.1368, for 0.86% profit. Today, Thursday, we could have bought it at 1.1298, selling it on an intraday trading at 1.1358, for an extra 0.53% ROI.
EURUSD has lost its bullish momentum after advancing to its strongest level in a month at 1.1370 on Wednesday. Thin liquidity raises risks of sharp moves heading into the New Year holiday and investors will keep a close eye on technical levels.
Earlier in the day, European Central Bank policymaker Klass Knot said that he sees a good chance of inflation in the euro area holding above 2% even after 2022. Meanwhile, ECB Governing Council member Ignazio Visco noted that the central bank was unlikely to end the tapering before 2023.
Earlier in the month, ECB President Christine Lagarde made it clear that they will not hike the policy rate until they end the purchases within the Asset Purchase Programme. These comments seem to be making it difficult for the shared currency to regather its strength in the early European session.
On the other hand, the benchmark 10-year US Treasury bond yield climbed above 1.5% on Wednesday, limiting the dollar’s losses for the time being.
Later in the session, the US Department of Labor’s weekly Initial Jobless Claims data will be featured in the US economic docket alongside the ISM-Chicago’s PMI for December. These data are unlikely to trigger a noticeable market reaction but year-end flows toward the end of the European session could open the door to wild fluctuations.
EURUSD stretches higher toward 1.1350 ahead of US data. The currency pair tested 1.1300 in the early European session amid renewed USD strength but erased a portion of its daily losses. Ahead of the weekly Initial Jobless Claims data from the US, the pair continues to edge higher toward 1.1350, as illustrated in the following chart.
On the downside, 1.1300 area, where the 100 and the 200-period SMA’s on the four-hour chart are located, act as significant support. In case a four-hour candle closes below that level, additional losses toward 1.1270 (static support) could be witnessed.
Initial resistance aligns at 1.1340 (static level) before 1.1360 (post-ECB high). Although the pair managed to rise above that level on Wednesday, it retreated back below it before closing, punctuating the significance of that resistance.
For next week, the EURUSD is now starting to trade in a downtrend. As illustrated in the following chart, there is a strong falling trend-line that was respected multiple times. We believe the bullish correction was due to the lack of liquidity during the holiday season. After the retest of the falling trend-line, a downtrend movement would be expected. According to our technical analysis, it is recommending to go Short at or above 1.1360, setting a Stop loss at 1.14, and to go Long at or below 1.1330, setting a Stop loss a 1.12.
As of 2:22 PM (GMT), the EURUSD was trading at 1.13181.
EUR to USD forecast for tomorrow: Euro to Dollar forecast on Friday, December, 31: exchange rate 1.1391 Dollars, maximum 1.1562, minimum 1.1220. EUR to USD forecast on Monday, January, 3: exchange rate 1.1375 Dollars, maximum 1.1546, minimum 1.1204. Euro to Dollar forecast on Tuesday, January, 4: exchange rate 1.1394 Dollars, maximum 1.1565, minimum 1.1223. EUR to USD forecast on Wednesday, January, 5: exchange rate 1.1371 Dollars, maximum 1.1542, minimum 1.1200.
In 1 week, Euro to Dollar forecast on Thursday, January, 6: exchange rate 1.1374 Dollars, maximum 1.1545, minimum 1.1203. EUR to USD forecast on Friday, January, 7: exchange rate 1.1419 Dollars, maximum 1.1590, minimum 1.1248. Euro to Dollar forecast on Monday, January, 10: exchange rate 1.1421 Dollars, maximum 1.1592, minimum 1.1250. EUR to USD forecast on Tuesday, January, 11: exchange rate 1.1458 Dollars, maximum 1.1630, minimum 1.1286. Euro to Dollar forecast on Wednesday, January, 12: exchange rate 1.1371 Dollars, maximum 1.1542, minimum 1.1200.
Until the next article, wishing you all a Happy and Prosperous New Year!
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.