How to use the basic technical analysis concepts we have shared with you to predict the next week’s currency pair price movement

 

EURUSD Rates Week in Review

Last week, our technical analysis indicated to go short on the EURUSD at 1.07429. In fact, it could have been shorted this past Monday, when the currency pair reached its high of 1.0828, allowing to cover the short position in the same day at 1.0637, locking in an intraday profit of 0.99%.

 

The EURUSD has rebound since covering the short position and is now trading closer to 1.10, off today‘s high of 1.1087. After a three-day rally, stocks are cooling and the safe-haven dollar is recovery as Corona-virus headlines and US consumer confidence are eyed.

 

Fundamental Overview

Schadenfreude, the German word for being joyful from the misery of others is what EURUSD is experiencing. The US dollar is on the back foot due to a mix of factors, and the common currency is rising, despite having its own issues. EURUSD has reached a high of 1.1086, over 400 pips above the multi-year lows recorded this week.

 

The greenback’s main downside driver is the Federal Reserve’s open-ended Quantitative Easing program announced on Monday. Jerome Powell, Chairman of the Fed, reiterated his commitment to the economy in a rare television interview and added that “we will not run out of ammunition.”

 

The bank’s unlimited chequebook is pushing stocks higher, rising on Thursday for the third consecutive day and weighing on the safe-haven dollar.

The second ongoing factor boosting equities and taking its toll on America’s currency comes from the progress of the Senate’s $2 trillion bill. The House will begin debating it today and will likely pass it late in the day.

 

Another reason to sell the dollar in normal days – but that is far from cheerful for markets is the surge in US Unemployment Claims. These have surged to 3.283 million, an increase of 1,053% in one week, and the highest on record. Estimates ranged between 800,000 to four million, and perhaps investors were ready to absorb any number.

 

While the increase may be temporary, the longer the crisis lasts, the more permanent these job losses become. President Donald Trump reiterated his desire to reopen the economy as soon as possible, yet the number of corona-virus cases continues surging. The US is now No. 1 in the number of infections with over 85,000. New York remains the hotspot.

 

S&P futures are down early on Friday, indicating a potential end to three-day rally and perhaps a recovery for the dollar.

 

Troubles in the old continent

The old continent is struggling as well, with hospitals in Spain and Italy overwhelmed by the flooding of patients. While both countries have reported fewer deaths on Thursday, the curve may be flattening but remains far from being depressed.

 

Moreover, EU leaders have failed to agree on a unified economic response. Germany remains opposed to issuing common bonds – dubbed “corona-bonds” while demands are rising from France, Italy, and Spain. A delay in the response may weigh on the euro.

 

On the other hand, monetary stimulus is in full swing. The European Central Bank has abandoned its self-imposed limits on buying bonds and is ready to provide further assistance to governments via the Outright Monetary Transmissions (OMT) program from 2012, the peak of the euro debt crisis.

 

ECB President Christine Lagarde, who is in self-isolation after coming in contact with a Covid-19 infected person is supportive of common bonds. The bank’s bond-buying activities on Thursday sent bond yields down, especially of bonds of peripheral countries.

 

Corona-virus cases from Spain are due out in the European morning, while figures from New York and from Italy come out later in the day. The disease has already taken the lives of over 24,000 people and infected over 532,000.

 

Apart from health headlines, the final US Consumer Sentiment figures from the University of Michigan for March will likely show another drop in sentiment.

 

Technical Analysis

Currently, the EURUSD is retreating from its highs as markets cool after a three-day rally.

 

 

The Relative Strength Index on the four-hour chart is flirting with the 70 mark, signaling overbought conditions. On the other hand, EUR/USD topped the 200 Simple Moving Average after previously rising above the 50 SMA. The currency pair is battling the 100 SMA and momentum remains positive.

 

Resistance awaits at 1.1085, the daily high, followed only by 1.1240, a high point last week. The next level to watch is 1.1360, followed by 1.1410.

 

Euro/dollar is battling 1.1050, and the next level to watch on the downside is 1.10950, which separated ranges last week. Next, 1.0890 was a swing high earlier this week and now works as support. It is followed by 1.0840, 1.0750, and 1.0640.

 

For next week, and revaluating the currency pair fundamental analysis, we believe its intrinsic value is now 1.09986, down from 1.12. As of today, at 8:56 AM (GMT+0) the EURUSD last trade was at 1.10044. So, we will be shorting it above 1.10, and for long below 1.09986. However, we expect to have some consolidation at around 1.10 area.

 

 

EUR to USD forecast for tomorrow

Euro to Dollar forecast on Monday, March, 30: exchange rate 1.1182 Dollars, maximum 1.1350, minimum 1.1014. EUR to USD forecast on Tuesday, March, 31: exchange rate 1.1281 Dollars, maximum 1.1450, minimum 1.1112. Euro to Dollar forecast on Wednesday, April, 1: exchange rate 1.1341 Dollars, maximum 1.1511, minimum 1.1171. EUR to USD forecast on Thursday, April, 2: exchange rate 1.1371 Dollars, maximum 1.1542, minimum 1.1200.

 

 

In 1 week Euro to Dollar forecast on Friday, April, 3: exchange rate 1.1420 Dollars, maximum 1.1591, minimum 1.1249. EUR to USD forecast on Monday, April, 6: exchange rate 1.1151 Dollars, maximum 1.1318, minimum 1.0984. Euro to Dollar forecast on Tuesday, April, 7: exchange rate 1.1050 Dollars, maximum 1.1216, minimum 1.0884. EUR to USD forecast on Wednesday, April, 8: exchange rate 1.0889 Dollars, maximum 1.1052, minimum 1.0726. Euro to Dollar forecast on Thursday, April, 9: exchange rate 1.0972 Dollars, maximum 1.1137, minimum 1.0807.

 

Again, remember to place stop losses, according to your risk tolerance as unexpected news coming to the market may significantly affect trends and prices. Until next article, we wish 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 nor KeySoft. 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 the future performance of the EUR/USD.

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