Last week, our technical indicators suggested going Short at or above 1.0870, setting a stop loss at 1.1050, and going Long at or below 1.0869, setting a stop loss at 1.0753.

This week, EURUSD price range was 1.0929 high set today, Thursday, and 1.0834 low set this past Tuesday. So Monday, we could have bought the currency pair at 1.0848, selling it on an intraday trading at 1.0925, for 0.71% profit. Also Monday, we could have Short it at 1.0925, covering it on an intraday trading at 1.0848, for 0.7% profit. Tuesday, we could have bought the currency pair at 1.0836, selling it on an intraday trading at 1.0896, for 0.55% profit. Also Tuesday, we could have Short it at 1.09, covering it on an intraday trading at 1.0836, for 0.59% profit. Wednesday, we could have Short it at 1.0923, covering it on an intraday trading at 1.0858, for 0.6% profit. Today, we could have Short it at 1.0927, covering it on an intraday trading at 1.0895, for an extra 0.29% ROI.

Fundamental Overview

Investors are aware of the fact that extreme policy tightening measures taken by Federal Reserve chair Jerome Powell and his teammates have restricted firms to bank upon borrowings. Rising interest obligations have resulted in lower operating margins for firms.

Also, weaker demand projections have forced the firms to avoid operating at full capacity. Investors will get more clarity about the scale of economic activities after the release of the US GDP data. Considering the fact that Fed chair Jerome Powell has tightened the monetary policy on an extreme note in CY2022, the street is expecting a contraction in the scale of economic activities. As per the projections, the economic data is seen at 2.6% lower than the former release of 3.2%. The release of the lower-than-anticipated GDP numbers for the fourth quarter of CY2022 will escalate recession fears.

Apart from that, the catalyst that will impact the US Dollar Index (DXY) is the preliminary Core Personal Consumption Expenditure (PCE) for the fourth quarter of CY2022. The economic data is expected to escalate to 5.3% from the prior release of 4.7%. Also, the Durable Goods Orders data will be keenly watched, which is seen at 2.5% vs. -2.1% in the prior release.

There is no denying the fact that inflationary pressures are softening in Eurozone as supply chain bottlenecks are easing. However, the economy is still facing wage growth as a roadblock in their agenda of achieving price stability. The European Central Bank (ECB) has already pushed its interest rates to 2.5% to tame stubborn inflation. But, European Central Bank policymakers are still not satisfied with the scale of the interest rate and are reiterating more interest rate hikes ahead.

ECB Governing Council member Gabriel Makhlouf said on Wednesday “We need to continue to increase rates at our meeting next week, by taking a similar step to our December decisions,” as reported by Reuters. He further added that they need to increase rates again at the March meeting.

Technical Analysis

EURUSD is holding steady at around 1.0900 in the European session. The US Dollar consolidates near multi-month lows amid weaker Treasury yields and a cautious risk tone. Investors refrain from placing fresh bets on EUR/USD ahead of the critical US GDP release.

The major currency pair justifies the overbought RSI (14) as it prints the first daily loss in seven days. Not only the Relative Strength Index (RSI) conditions but the ascending trend line from mid-December, near 1.0940 by the press time, also challenges the EURUSD buyers.

With this, the pair is likely to decline towards the 10-DMA support, close to 1.0850 at the latest. However, any further downside needs to conquer the previous monthly low surrounding 1.0735 to welcome the EURUSD bears. Following that, a downward trajectory towards the monthly low near 1.0485 cannot be ruled out.

Meanwhile, an upside break of the aforementioned six-week-long resistance line, around 1.0940, could quickly propel EURUSD towards the 1.1000 round figure.

Even so, another ascending trend line resistance, from November 15, 2022, could challenge the EURUSD buyers afterward around 1.1090. It’s worth mentioning that the top marked during late March of the last year, near 1.1185, could jump on the bull’s radar past 1.1090.

To sum up, EURUSD bulls are likely to take a breather as traders braces for the key data/events. However, the bears are far from the entry.

For next week, EURUSD is making Rising Wedge Pattern. After, breaking this Wedge it has maximum Chances, we may see a good Drop in price to around 1.07, which is a strong support level. Hence, our technical analysis are suggesting going Short at or above 1.085, setting a stop loss at 1.1050, and going Long at or below 1.08, setting a stop loss at 1.07.

As of 11:28 AM (GMT), the EURUSD was trading at 1.09009.

EUR to USD forecast for tomorrow: Euro to Dollar forecast on Friday, January, 27: exchange rate 1.0954 Dollars, maximum 1.1118, minimum 1.0790. EUR to USD forecast on Monday, January, 30: exchange rate 1.0969 Dollars, maximum 1.1134, minimum 1.0804. Euro to Dollar forecast on Tuesday, January, 31: exchange rate 1.0986 Dollars, maximum 1.1151, minimum 1.0821. EUR to USD forecast on Wednesday, February, 1: exchange rate 1.1011 Dollars, maximum 1.1176, minimum 1.0846.

 

In 1 week, Euro to Dollar forecast on Thursday, February, 2: exchange rate 1.1045 Dollars, maximum 1.1211, minimum 1.0879. EUR to USD forecast on Friday, February, 3: exchange rate 1.1045 Dollars, maximum 1.1211, minimum 1.0879. Euro to Dollar forecast on Monday, February, 6: exchange rate 1.1010 Dollars, maximum 1.1175, minimum 1.0845. EUR to USD forecast on Tuesday, February, 7: exchange rate 1.1016 Dollars, maximum 1.1181, minimum 1.0851. Euro to Dollar forecast on Wednesday, February, 8: exchange rate 1.0991 Dollars, maximum 1.1156, minimum 1.0826.

 

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.

 

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