Forex Forecast: 30 May – 3 June 2022

 

EURUSD Rates Week in Review

Last week, our technical indicators suggested to go Long at or below 1.04, setting a Stop Loss at 1.00, and Short it at or above 1.04961 setting a Stop Loss at 1.06.

This week, EURUSD price range was 1.0749 high, set this past Tuesday, and 1.0558 low, set this past Monday. If we have follow our trading discipline, from last week technical analysis recommendation, we just had one Short trading opportunity, where Monday we could have short the currency pair at 1.06, covering it on an intraday trading at 1.0560, for 0.38% ROI.

 Fundamental Overview

EURUSD has managed to stage a rebound after having tested the 1.0660 level on Wednesday but failed to reclaim 1.0700. The near-term technical picture doesn’t provide any directional clues as markets await the next catalyst.

On Wednesday, European Central Bank (ECB) Governing Council member Klaas Knot noted that a 50 basis points rate hike in July was on the table, adding that inflation expectations were “at the upper limit of being well-anchored.” The shared currency, however, struggled to capitalize on these remarks as comments from ECB policymakers point to dissent over the size of the July rate hike.

On the other hand, the minutes of the FOMC’s May meeting revealed that many participants judged that inflation risks were skewed to the upside. Furthermore, the publication showed that a number of policymakers thought it would be appropriate for the Fed to consider sales of mortgage-backed securities. Although the hawkish tone of the statement helps the dollar stay resilient against its peers, falling US Treasury bond yields don’t allow it to gather strength. As of writing, the benchmark 10-year US Treasury bond yield was down 1% on the day at 2.72%.

In the second half of the day, the US Bureau of Economic Analysis will release its second estimate for the first-quarter GDP growth. The print is unlikely to diverge from the first estimate and trigger a market reaction.

Market participants will pay close attention to the Pending Home Sales data from the US, which is forecast to show a 2% contraction on a monthly basis in April. Earlier in the week, the disappointing New Home Sales data triggered a flight to safety and a similar reaction could be witnessed if Pending Home Sales come in worse than expected. Investors grow increasingly concerned about the negative impact of rising interest rates on the housing market and a negative shift in risk sentiment could weigh on EURUSD in the second half of the day. Nevertheless, the dollar might find it difficult to gather bullish momentum unless the US yields rebound.

Technical Analysis

EURUSD is advancing above 1.0700 amid a sudden positive shift in risk sentiment after Bloomberg reported that the EU is working on a gas deal with Egypt, Israel to shore up supplies. The safe-haven dollar wilts amid risk-on flows, ahead of US GDP.

 

EURUSD is likely to continue to fluctuate within the 1.0740 (the end of the latest uptrend)-1.0630 (200-period SMA on the four-hour chart) range in the near term. The next significant action could be triggered once the pair breaks out of this channel.

With a drop below 1.0630, EURUSD could push lower toward 1.0600 (Fibonacci 38.2% retracement) and 1.0570 (50-period SMA).

On the flip side, 1.0700 (psychological level) aligns as interim resistance ahead of 1.0740. A daily close above the latter could be seen as a significant bullish development and open the door for additional gains toward 1.0800 (psychological level).

 For next week, Our technical analysis is looking for a reversal pattern side, which was previously a resistance, turning now to support and is recommending to go Long at or below 1.08, setting a Stop Loss at 1.06, and Short it at or above 1.0825, setting a Stop Loss at 1.09.

 

As of 13:31 PM (GMT), the EURUSD was trading at 1.06973.

 

EUR to USD forecast for tomorrow: Euro to Dollar forecast on Friday, May, 27: exchange rate 1.0389 Dollars, maximum 1.0545, minimum 1.0233. EUR to USD forecast on Monday, May, 30: exchange rate 1.0562 Dollars, maximum 1.0720, minimum 1.0404. Euro to Dollar forecast on Tuesday, May, 31: exchange rate 1.0535 Dollars, maximum 1.0693, minimum 1.0377. EUR to USD forecast on Wednesday, June, 1: exchange rate 1.0656 Dollars, maximum 1.0816, minimum 1.0496.

 

In 1 week, Euro to Dollar forecast on Thursday, June, 2: exchange rate 1.0573 Dollars, maximum 1.0732, minimum 1.0414. EUR to USD forecast on Friday, June, 3: exchange rate 1.0685 Dollars, maximum 1.0845, minimum 1.0525. Euro to Dollar forecast on Monday, June, 6: exchange rate 1.0709 Dollars, maximum 1.0870, minimum 1.0548. EUR to USD forecast on Tuesday, June, 7: exchange rate 1.0741 Dollars, maximum 1.0902, minimum 1.0580. Euro to Dollar forecast on Wednesday, June, 8: exchange rate 1.0605 Dollars, maximum 1.0764, minimum 1.0446.

 

 

 

 

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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