Forex Forecast: 31 October – 4 November 2022
EURUSD Rates Week in Review
Last week, our technical indicators suggested to go Short on the EURUSD at or above 0.97500, setting a Stop Loss at 0.98600, and to go Long at or below 0.97800, setting a Stop Loss at 0.96400.
This week, EURUSD price range was 1.0093 high, set today, Thursday, and 0.9807 low, set this past Monday. So, Monday, we could have short the currency pair at 0.986, covering it on an intraday trading at 0.9809, for 0.52% profit. Tuesday, we could have short it at 0.986, covering it on an intraday trading at 0.9850, for 0.1% profit.
EURUSD has gone into a consolidation phase early Thursday after having reached its highest level since mid-September at around 1.0100 during the Asian trading hours. In case the European Central Bank (ECB) delivers a hawkish surprise later in the day, the pair could gather enough bullish momentum to extend its recovery.
On Wednesday, the broad-based selling pressure surrounding the greenback fueled EURUSD’s rally. The Bank of Canada’s dovish 50 basis points rate hike caused global bond yields to push lower and the dollar suffered heavy losses against its major rivals with the US Dollar Index losing 1% for the second straight day.
The ECB is widely expected to hike its key rates by 75 basis points following the October policy meeting. Rather than the rate decision, the ECB’s language should impact the shared currency’s valuation.
In case the bank communicates policymakers’ willingness to stick to an aggressive tightening stance with another super-sized rate increase in December, EURUSD is likely to gain traction.
On the other hand, the euro could have a hard time finding demand in case the policy statement reveals that some policymakers leaned toward a 50 bps rate hike in October or that they didn’t anticipate another big rate increase before the end of the year.
Although inflation in the euro continues to run uncomfortably hot, renewed concerns over a severe recession put the ECB between a rock and a hard place.
Four reasons to expect EURUSD to tumble.
In the meantime, the US Bureau of Economic Analysis will release its first estimate of the third-quarter Gross Domestic Product (GDP) growth.
The market expectation points to a 2.4% annualized expansion following the 0.6% contraction recorded in the second quarter. Since the beginning of the week, markets observed a dollar selloff whenever there was a disappointing data release.
Hence, a similar, straightforward, reaction could be expected with a weaker-than-expected GDP print weighing on the USD and vice versa.
It is worth noting that the pair could fluctuate wildly with investors assessing the ECB language and the implications of the US data on the Fed’s rate outlook.
EURUSD is trading close to.1.0050, retreating from near 1.0100 in early European trading. Investors resort to profit-taking ahead of the critical ECB rate hike decision and the US advance Q3 GDP release.
On the downside, 1.0050 (static level, former resistance) aligns as initial support before the all-important 1.0000 level. In case a dovish ECB message triggers a euro selloff, a drop below parity could bring in additional sellers and cause the pair to slide toward 0.9950 (static level, 20-period SMA).
Key resistance seems to have formed at 1.0100 (static level, psychological level). If the pair rises above that level and confirms it as support, it could target 1.0175 (static level) and 1.0200 (September high).
Meanwhile, the Relative Strength Index (RSI) indicator on the four-hour chart stays slightly above 70, suggesting that there is more room on the downside for the pair to correct its overbought conditions.
For next week, as illustrated in the following 4-hour chart, we have a rare beautiful bearish Gartley pattern, which could complete near a strong resistance level , where the market moved lower by more than 6% or 660 pips. There are two ways to approach this pattern:
First way: limit order at D completing level
Second way: wait for a further push to the upside near the structure resistance zone, wait for confirmation and then execute a short position on the currency pair.
Hence, our technical analysis are suggesting to go Short on the EURUSD at or above 0.99, setting a Stop Loss at 1.02, and to go Long at 0.9853, setting a Stop Loss at 0.97.
As of 12:56 PM (GMT+1), the EURUSD was trading at 1.00447.
EUR to USD forecast for tomorrow: Euro to Dollar forecast on Friday, October, 28: exchange rate 1.0290 Dollars, maximum 1.0444, minimum 1.0136. EUR to USD forecast on Monday, October, 31: exchange rate 1.0305 Dollars, maximum 1.0460, minimum 1.0150. Euro to Dollar forecast on Tuesday, November, 1: exchange rate 1.0381 Dollars, maximum 1.0537, minimum 1.0225. EUR to USD forecast on Wednesday, November, 2: exchange rate 1.0395 Dollars, maximum 1.0551, minimum 1.0239.
In 1 week, Euro to Dollar forecast on Thursday, November, 3: exchange rate 1.0303 Dollars, maximum 1.0458, minimum 1.0148. EUR to USD forecast on Friday, November, 4: exchange rate 1.0320 Dollars, maximum 1.0475, minimum 1.0165. Euro to Dollar forecast on Monday, November, 7: exchange rate 1.0452 Dollars, maximum 1.0609, minimum 1.0295. EUR to USD forecast on Tuesday, November, 8: exchange rate 1.0392 Dollars, maximum 1.0548, minimum 1.0236. Euro to Dollar forecast on Wednesday, November, 9: exchange rate 1.0466 Dollars, maximum 1.0623, minimum 1.0309.
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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