Forex Forecast: 4 – 8 April 2022

 

EURUSD Rates Week in Review

Last week, our technical indicators suggested to go Short at or above 1.0940, setting a Stop Loss at 1.1050, and to go Long at or below 1.0950, setting a Stop Loss at 1.09076.

This week, EURUSD price range was 1.1184 high set today, Thursday, and 1.0944 set this past Monday. So, Monday, we could have short the currency pair at 1.0998, covering it on an intraday trading at 1.0946, for 0.47% profit. Also Monday, we could have bought it at 1.0946, selling it on an intraday trading at 1.0950, for 0.04% profit. Tuesday, we could have short it at  1.1135, covering it on an intraday trading at 1.0972, for 1.46% profit. Wednesday, we could have short it at  1.1169, covering it on an intraday trading at 1.1084, for 0.76% profit. Today, we could have short it at  1.1182, buying it back on an intraday trading at 1.1091, for an extra 0.81% ROI.

Fundamental Overview

EURUSD has lost its bullish momentum after having reached its strongest level in nearly a month at 1.1184 early Thursday. Later in the day, the US Bureau of Economic Analysis’ Personal Consumption Expenditures (PCE) Price Index data could have a significant impact on the greenback’s valuation and drive the pair’s action.

Markets expect the Core PCE Price Index, the Federal Reserve’s preferred gauge of inflation, to rise to 5.5% on a yearly basis in February from 5.2% in January.

The CME Group’s FedWatch Tool shows that markets are currently pricing in a 64% probability of a 50 basis points (bps) rate hike in May. A stronger-than-expected PCE print could ramp up the odds of a double-dose rate increase and help the greenback gather strength against its rivals. The US Dollar Index, which closed the previous two trading days in negative territory and lost more than 1% during that period, was last seen moving sideways below 98.00.

US February PCE Inflation Preview: Will inflation data confirm 50 bps May hike?

It’s also worth noting that the market volatility could rise in the second half of the day due to quarter-end flows and the latest upsurge witnessed in EURUSD could be seen as a profit-taking opportunity.

In the meantime, US stock index futures are posting modest gains in the early European session, suggesting that the shared currency could stay resilient against the dollar in case risk flows continue to dominate the markets.

Technical Analysis

EURUSD stays within a touching distance of 1.1100 after US data. EURUSD has struggled to shake off the bearish pressure after the latest data releases from the US. The US Bureau of Economic Analysis reported that the annual Core PCE Price Index edged higher to 5.4% in February from 5.2% in January, coming in slightly lower than the market expectation of 5.5%.

 

On the above four-hour chart, the Relative Strength Index (RSI) holds near 70, showing that the pair is yet to correct its overbought conditions.

On the downside, 1.1100 (200-period SMA) aligns as key support and buyers could take action in case the pair retreats toward that level. If that support fails, however, the near-term technical outlook could turn bearish and the pair could face interim support at 1.1080 (Fibonacci 61.8% retracement of the latest downtrend, 20-period SMA) before targeting 1.1040 (Fibonacci 50% retracement, 50-period SMA, 100-period SMA).

The first resistance is located at 1.1200 (psychological level) ahead of 1.1230 (Static level). If the pair starts using the latter as support, it could stretch higher toward 1.1270 (static level).

 For next week, in the following  EURUSD 4-hour chart, we have noticed how EURUSD managed to bounce within the 1.08 area and managed to initially reverse from its prior established downtrend. This was a first source of increased volatility, testing resistance levels within the range. Furthermore, EURUSD has formed important higher highs and lower lows together in this main potential, Ascending-Bull-Pennant-Formation, in which it has appropriate support determined by the 20-EMA marked in blue, and the local wave-count forming simultaneously in the major wave B, reaching from A to C, which has been already completed.

Now, EURUSD managed to greatly bounce within the lower boundary of the Flag-Formation and is attempting a breakout above the upper boundary with a local Flag-Formation in this area marked in orange. In the near future, once EURUSD managed to breakout above the upper boundary this will be the origin of a continuation and the activation of the Bull-Flag-Target-Zone marked in my chart.

Once this zone has been reached the situation needs to be elevated again and EURUSD needs to show how it will perform next, either a pullback or a continuation formation that sends EURUSD on the uptrend.

Hence and according to our technical analysis, we would go Long on the currency pair at or below 1.11, setting a stop loss at 1.09, and Short it at or above 1.1150, setting a stop loss at 1.13.

 

As of 3:02 PM (GMT), the EURUSD was trading at 1.10850.

 

EUR to USD forecast for tomorrow: Euro to Dollar forecast on Friday, April, 1: exchange rate 1.1231 Dollars, maximum 1.1399, minimum 1.1063. EUR to USD forecast on Monday, April, 4: exchange rate 1.1333 Dollars, maximum 1.1503, minimum 1.1163. Euro to Dollar forecast on Tuesday, April, 5: exchange rate 1.1339 Dollars, maximum 1.1509, minimum 1.1169. EUR to USD forecast on Wednesday, April, 6: exchange rate 1.1321 Dollars, maximum 1.1491, minimum 1.1151.

 

In 1 week, Euro to Dollar forecast on Thursday, April, 7: exchange rate 1.1313 Dollars, maximum 1.1483, minimum 1.1143. EUR to USD forecast on Friday, April, 8: exchange rate 1.1291 Dollars, maximum 1.1460, minimum 1.1122. Euro to Dollar forecast on Monday, April, 11: exchange rate 1.1301 Dollars, maximum 1.1471, minimum 1.1131. EUR to USD forecast on Tuesday, April, 12: exchange rate 1.1262 Dollars, maximum 1.1431, minimum 1.1093. Euro to Dollar forecast on Wednesday, April, 13: exchange rate 1.1224 Dollars, maximum 1.1392, minimum 1.1056.

 

 

 

 

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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