Forex Forecast: 31 May – 4 June 2021

 

EURUSD Rates Week in Review

Last week, our technical indicators suggested to go Long on the EURUSD at or below 1.2050, setting a stop loss at 1.19, and Short it at or above 1.21978, setting a stop loss at 1.2240.

This week, EURUSD price range was 1.2267 high, set this past Tuesday, and 1.2172 low, set this past Monday. Hence, on Monday, we could have Short the currency pair at 1.2228, buying it back on an intraday trading at 1.2174, for 0.44% profit. Tuesday, we could have short  it at 1.2240, covering it on an intraday trading at 1.2213, for 0.22% profit. Wednesday, we could have short it at 1.2240, covering it on an intraday trading at 1.2184, for 0.46%  and today, Thursday, we could have short it at 1.2213, covering it on an intraday trading at 1.2177, for an extra 0.29% profit.

 Fundamental Overview

“(Don’t Fear) The Reaper”, a 1970s song, included in any driving music collection is now relevant for EURUSD traders. The reaper is the Federal Reserve, which is tiptoeing towards tapering. Fear that the world’s most powerful central bank would begin cutting down on its $120 billion/month bond buys is boosting the dollar.

Randal Quarles, a Governor at the Fed, said that the bank could consider having a discussion on reducing purchases in one of the upcoming meetings if conditions improve. This subtlety echoes the Fed’s meeting minutes released last week and was blended with the Fed’s regular messages that inflation is transitory and the economy has a long way to go. The latter will come to a test.

Economists expect a minor upgrade of US first-quarter Gross Domestic Product growth from 6.4% to 6.5% in the second release. Without a major surprise in GDP, the focus will likely be the more recent Durable Goods Orders statistics for April, which are set to show a slower increase in investment. Low expectations mean that a minor upside surprise could boost the dollar.

Weekly Unemployment Claims are forecast to extend their gradual decline and Pending Home Sales will also be of interest amid signs of cooling in the housing sector.

Another factor supporting the greenback is end-of-month flows. As Monday, May 31, is a bank holiday in the US and the UK, money managers are adjusting their portfolios and this seems to benefit the greenback.

Across the Atlantic, optimism about Europe’s vaccine-led recovery seems to be priced into the euro while fears of the variant first identified in India are creeping in. France joined Germany in demanding quarantines from UK visitors, potentially hurting the rebound of the tourism sector.

While the broader uptrend still remains intact, the end of May could see EURUSD come under increased pressure.

 Technical Analysis

EURUSD has advanced above 1.22, taking advantage of dollar weakness. Safe-haven flows to the greenback are diminishing amid optimism from Sino-American talks.

US Durable Goods Orders, GDP and jobless claims are being watched closely.

 

Eurodollar has slipped under the uptrend support line that accompanied it since mid-May and also dropped under the 50 Simple Moving Average on the above four-hour chart.

While momentum remains positive the currency pair is holding above the 100 and 200 SMAs, bulls are losing some ground.

Support awaits at the daily low of 1.2175, followed by 1.2155, 1.2105 and 1.2075.

Some resistance is at 1.22, which is the daily high. It is then followed by the former triple top of 1.2245, and then by the May peak of 1.2266.

 For next week, and as illustrated in the following chart, our technical indicators are suggesting to maintain all Short positions on the EURUSD and continuing to go Short on the currency pair at or above 1.2170, setting a stop loss at 1.22763.

 

As of 1:22 PM (GMT+1), the EURUSD was trading at 1.22018.

 

EUR to USD forecast for tomorrow:  Euro to Dollar forecast on Friday, May, 28: exchange rate 1.2129 Dollars, maximum 1.2311, minimum 1.1947. EUR to USD forecast on Monday, May, 31: exchange rate 1.2164 Dollars, maximum 1.2346, minimum 1.1982. Euro to Dollar forecast on Tuesday, June, 1: exchange rate 1.2202 Dollars, maximum 1.2385, minimum 1.2019. EUR to USD forecast on Wednesday, June, 2: exchange rate 1.2150 Dollars, maximum 1.2332, minimum 1.1968.

In 1 week, Euro to Dollar forecast on Thursday, June, 3: exchange rate 1.2204 Dollars, maximum 1.2387, minimum 1.2021. EUR to USD forecast on Friday, June, 4: exchange rate 1.2155 Dollars, maximum 1.2337, minimum 1.1973. Euro to Dollar forecast on Monday, June, 7: exchange rate 1.2224 Dollars, maximum 1.2407, minimum 1.2041. EUR to USD forecast on Tuesday, June, 8: exchange rate 1.2238 Dollars, maximum 1.2422, minimum 1.2054. Euro to Dollar forecast on Wednesday, June, 9: exchange rate 1.2305 Dollars, maximum 1.2490, minimum 1.2120.

 

 

 

 

 

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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