Forex Forecast: 3 -7 May 2021

 

EURUSD Rates Week in Review

Last week, our technical indicators suggested to go short on the currency pair at or above 1.2075, setting a stop loss at 1.2150, and go Long at or below 1.19. This week, EURUSD price range was 1.2150 high, set today, Thursday, and 1.2056 low, set this past Tuesday and Wednesday. Hence, we could have Short the currency pair this past Monday at 1.2115, covering it on an intraday trading at 1.2058, for 0.43% profit. Tuesday, we could have short it at 1.2091, covering it on an intraday trading at 1.2058, for 0.27% profit. Wednesday, we could have short it at 1.2134, covering it on an intraday trading at 1.2058, for 0.63% ROI, and today, Thursday, we could have short it at 1.2148, closing the Short position on an intraday trading at 1.2109, for an extra 0.32% profit.

 Fundamental Overview

No taper, and therefore no tantrum in markets, but a positive mood that has been weighing on the safe-haven dollar and sending EURUSD to 1.2150, the highest since late February. Traders have no time to rest before the next top-tier US event.

The Federal Reserve left its interest rate unchanged as expected in its April decision, and stressed that any pickup in inflation is transitory even though acknowledging the economic improvement. Reducing the pace of buying bonds from the current $120 billion/month was not even on the agenda, which means further dollar devaluation.

Powell Analysis: The five dovish comments that down the dollar for longer

Jerome Powell, Chairman of the Federal Reserve, stressed that millions of Americans are out of work and that inflation is due to base effects and bottlenecks, which will likely be resolved. He also said the economy has a “long way to go.” Did he receive Thursday’s Gross Domestic Product figures in advance?

The economic calendar is pointing to a considerable annualized increase of 6.5% in US GDP in the first quarter of 2021. The year began with a harsh upswing of COVID-19, continued with a “deep freeze” storm but then turned around.

America’s vaccination campaign began kicking in and President Joe Biden’s massive $1.9 trillion stimulus deal came into effect in March, enough to impact growth figures. However, Disappointing Durable Goods Orders for March, published on Monday, somewhat dampened market expectations, and that may lead to a positive surprise.

US Q1 GDP Preview:

Eyes on inflation and FOMC as economic recovery gathers steam, while there is a chance for GDP to fall short of investors’ expectations, the euro is well-positioned to take advantage of a minor miss in US data and may weather upbeat figures.

The old continent’s vaccination campaign has picked up markedly and infections are falling. German and Spanish inflation figures are unlikely to ruin the rally, at least for now.

All in all, the broader trend is to the upside, but a short-lived correction cannot be ruled out.

 Technical Analysis

EURUSD retreats toward 1.2100 following its run-up to a fresh high since late February. US dollar bounces off a two-month low after Biden sounds tough on China, Russia while urging congress to pass the stimulus. Fed rejected tapering calls. German CPI, US Q1 GDP awaited.

 

Eurodollar is trending higher since bottoming out early in April. It has recently been trading above an uptrend support line that follows the 50 Simple Moving Average. Momentum remains to the upside and the Relative Strength Index (RSI) is below 70, thus outside overbought conditions.

Overall, bulls are in the driver’s seat.

The fresh April high of 1.2150 is the immediate resistance line. It is followed by 1.2180 and 1.2240, levels last seen in February.

Support awaits at 1.2117, the previous April peak, and then by 1.2080, 1.2050 and 1.20, all stepping stones on the way up.

 For next week, our technical indicators insist on maintaining a short position strategy on the EURUSD, suggesting to go Short on the EURUSD at or above 1.21582, setting a stop loss at 1.22604, and set a Long position at or below 1.20503, setting a stop loss at 1.19974.

 

As of 1:52 PM (GMT), the EURUSD was trading at 1.2127.

 

EUR to USD forecast for tomorrow:  Euro to Dollar forecast on Friday, April, 30: exchange rate 1.2171 Dollars, maximum 1.2354, minimum 1.1988. EUR to USD forecast on Monday, May, 3: exchange rate 1.2176 Dollars, maximum 1.2359, minimum 1.1993. Euro to Dollar forecast on Tuesday, May, 4: exchange rate 1.2163 Dollars, maximum 1.2345, minimum 1.1981. EUR to USD forecast on Wednesday, May, 5: exchange rate 1.2244 Dollars, maximum 1.2428, minimum 1.2060.

 

In 1 week, Euro to Dollar forecast on Thursday, May, 6: exchange rate 1.2224 Dollars, maximum 1.2407, minimum 1.2041. EUR to USD forecast on Friday, May, 7: exchange rate 1.2224 Dollars, maximum 1.2407, minimum 1.2041. Euro to Dollar forecast on Monday, May, 10: exchange rate 1.2293 Dollars, maximum 1.2477, minimum 1.2109. EUR to USD forecast on Tuesday, May, 11: exchange rate 1.2296 Dollars, maximum 1.2480, minimum 1.2112. Euro to Dollar forecast on Wednesday, May, 12: exchange rate 1.2281 Dollars, maximum 1.2465, minimum 1.2097.

 

 

 

 

 

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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