Forex Forecast: 31 January – 4 February 2022

 

EURUSD Rates Week in Review

Last week, our technical indicators suggested t to go Long on the EURUSD at or below 1.13516, setting a Stop loss at 1.1911, and to go Short at or above 1.14, setting a Stop loss at 1.1525.

This week, EURUSD price range was 1.1346 high, set this past Monday, and 1.1193 low set today, Thursday. So, Monday, we could have bought the currency pair at 1.1292, selling it on an intraday trading at 1.1344, for 0.46% profit. Tuesday, we could have bought it at 1.1265, selling it on an intraday trading at 1.1328, for 0.56% profit. Wednesday, we could have bought it at 1.1237, selling it on an intraday trading at 1.1310, for 0.65% profit.  Today, Thursday, we could have bought it at 1.1195, selling it on an intraday trading at 1.1241, for an extra 0.41% ROI.

  Fundamental Overview

EURUSD has met heavy selling pressure in the late American session on Wednesday and fell to its lowest in more than two months. With the greenback continuing to outperform its rivals, the pair stays on the back foot early Thursday and closes in on the 17-month low it set at 1.1186 on November 24. FOMC Chairman Jerome Powell’s hawkish remarks lifted US Treasury bond yields late Wednesday and allowed the dollar to gather strength.

Although the Fed hasn’t made any changes to its plan to end the QE in early March, Powell said that they will look at balance sheet reduction after the rate lift-off. The chairman further noted that policymakers were in favor of hiking the policy rate at the next meeting and added that the inflation situation was now worse than it was in December. Additionally, Powell said that they had “quite a bit of room” to raise rates without damaging the labor market.

The CME Group’s Fed-Watch Tool shows that markets are now pricing a more-than-60% chance of the Fed hiking its policy rate by 50 basis points by May.

Later in the session, the US Bureau of Economic Analysis will release its first estimate of the annualized GDP growth in the fourth quarter. The market expectation is for the US economy to expand by 5.4% following a 2.3% growth in the previous quarter. A reading near the market forecast should help the US Dollar Index extend its rally. On the other hand, a disappointing print could limit the dollar’s gains, at least in the near term. Nevertheless, the policy divergence between the Fed and the European Central Bank should continue to favor the dollar over the euro regardless of the market reaction to the GDP report.

Technical Analysis

EURUSD stays pressured towards 1.1200 on firmer dollar yields, as global stocks take a plunge. The Fed’s hawkishness is reverberating throughout markets, boosting the safe-haven US dollar. The US two-year Treasury yields jump to 23-month highs. US Q4 GDP awaited.

 

EURUSD is trading within a touching distance of the 1.1200 psychological level. In case this support turns into resistance, the pair could face additional bearish pressure and touch its weakest level in 18 months near 1.1180. Below that level, 1.1170 (static support from Jul. 2020) aligns as the next support before sellers can target 1.1100 (psychological level).

1.1250 (static level, former support) now acts as the first technical resistance ahead of 1.1270 (static level, former support) and 1.1300 (psychological level).

With the Relative Strength Index (RSI) indicator on the four-hour chart showing extremely oversold conditions below 30, a technical correction could be witnessed in the short term but the bearish bias should stay intact unless the pair reclaims 1.1300.

 For next week, EURUSD is trading in a range for two months now, as if the pair is waiting for a trigger to make a move. One thing is clear though, after such a long consolidation the move will be very strong and considering the fact, EURUSD “tried” to the upside and failed is probable that the next move will be to the downside, and let’s not forget the trend is in USD’s favor and also the fundamentals. That being said, it is expected a fall for EURUSD, for short-term traders, 1.1190 can be the first target, but swing traders can focus on 1.08 support. According to our technical analysis is suggesting to go Long on the currency pair at or below 1.14, setting a Stop Loss at 1.10, and to short it at or above 1.14, setting a Stop Loss at 1.1520.

 

As of 1:11 AM (GMT), the EURUSD was trading at 1.11850.

 

EUR to USD forecast for tomorrow: Euro to Dollar forecast on Friday, January, 28: exchange rate 1.1183 Dollars, maximum 1.1351, minimum 1.1015. EUR to USD forecast on Monday, January, 31: exchange rate 1.1160 Dollars, maximum 1.1327, minimum 1.0993. Euro to Dollar forecast on Tuesday, February, 1: exchange rate 1.1135 Dollars, maximum 1.1302, minimum 1.0968. EUR to USD forecast on Wednesday, February, 2: exchange rate 1.1174 Dollars, maximum 1.1342, minimum 1.1006.

 

In 1 week, Euro to Dollar forecast on Thursday, February, 3: exchange rate 1.1145 Dollars, maximum 1.1312, minimum 1.0978. EUR to USD forecast on Friday, February, 4: exchange rate 1.1158 Dollars, maximum 1.1325, minimum 1.0991. Euro to Dollar forecast on Monday, February, 7: exchange rate 1.1081 Dollars, maximum 1.1247, minimum 1.0915. EUR to USD forecast on Tuesday, February, 8: exchange rate 1.1075 Dollars, maximum 1.1241, minimum 1.0909. Euro to Dollar forecast on Wednesday, February, 9: exchange rate 1.1032 Dollars, maximum 1.1197, minimum 1.0867.

 

 

 

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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