Forex Forecast: 4 – 8 July 2022
EURUSD Rates Week in Review
Last week, our technical indicators suggested to go Short on EURUSD at or above 1.05418, setting a Stop Loss at 1.06, and go Long at or below 1.05056, setting a Stop Loss at 1.03.
This week, EURUSD price range was 1.0616 high, set this past Monday, and 1.0382 low, set today, Thursday. So, Monday, we could have short the currency pair at 1.0614, covering it on an intraday trading at 1.0551, for 0.59% profit. Tuesday, we could have short it at 1.0605, covering it on an intraday trading at 1.0505, for 0.94% profit. Wednesday, we could have short it at 1.0535, covering it on an intraday trading at 1.0436, for 0.94% profit. Also Wednesday, we could have bought it at 1.0436, selling it on an intraday trading at 1.0539, for 0.99% profit. Today, Thursday, we could have bought it at 1.0384, selling it on an intraday trading at 1.0466, for an extra 0.79% ROI.
Fundamental Overview
EURUSD has failed to stage a convincing rebound after having closed the previous two days deep in negative territory. The pair is likely to stay on the back foot with safe-haven flows dominating the financial markets on Thursday.
While speaking at the European Central Bank’s (ECB) annual Forum on Central Banking on Wednesday, ECB President Christine Lagarde refrained from offering any fresh insights regarding the bank’s next policy move. On the other hand, FOMC Chairman Jerome Powell reiterated that they will remain committed to taming inflation even if that were to result in a slowdown in economic growth. Powell further noted that the dollar strength was “disinflationary at the margins.”
Reflecting the positive impact of Powell’s comments on the greenback’s market valuation, the US Dollar Index (DXY) climbed to its strongest level in two weeks above 105.00.
Ahead of the Personal Consumption Expenditures (PCE) Price Index data, the Fed’s preferred gauge of inflation, from the US, the DXY stays relatively quiet, allowing EUR/USD to stay in its daily range.
Nevertheless, the Euro Stoxx 600 is down 1.5% and US stock index futures lose between 1.% and 1.4% in the European session. In case markets remain risk-averse in the second half of the day, the pair is likely to stay on the back foot.
Meanwhile, the data from Germany showed that the Unemployment Rate unexpectedly rose to 5.3% in June from 5% in May with the number of unemployed increasing by 133,000 during that period. The disappointing German jobs report seems to be weighing on the euro as well.
Unless there is a significant positive shift in market mood, sellers are likely to retain control of EURUSD action.
Technical Analysis
Following a short-lasting recovery attempt in the early European session, EURUSD has met fresh bearish pressure and declined below 1.0400. The dollar continues to gather strength amid risk aversion as investors await the PCE inflation data from the US.
The pair is facing immediate resistance at 1.0470 (Fibonacci 23.6% retracement of the latest downtrend). In case the pair fails to reclaim that level, it is likely to extend its slide toward 1.0400 (psychological level), 1.0380 (end-point of the latest downtrend) and 1.0360 (June 15 low).
On the upside, the pair could recover toward 1.0500 (psychological level) and 1.0520 (Fibonacci 38.2% retracement, 50-period SMA, 100-period SMA on the four-hour chart) if buyers managed to flip 1.0470 into support.
It is worth noting that the Relative Strength Index (RSI) indicator holds above 30 for now, suggesting that the pair has more room on the downside before turning technically oversold.
For next week, our technical analysis are suggesting for a rebound in the currency pair, where price can reach resistance level of 1.0620, before resuming again its downtrend to support level of 1.0355. Hence, we would go Short on EURUSD at or above 1.06, setting a Stop Loss at 1.07, and go Long at or below 1.05, setting a Stop Loss at 1.03.
As of 2:00 PM (GMT), the EURUSD was trading at 1.03979.
EUR to USD forecast for tomorrow: Euro to Dollar forecast on Friday, July, 1: exchange rate 1.0362 Dollars, maximum 1.0517, minimum 1.0207. EUR to USD forecast on Monday, July, 4: exchange rate 1.0304 Dollars, maximum 1.0459, minimum 1.0149. Euro to Dollar forecast on Tuesday, July, 5: exchange rate 1.0332 Dollars, maximum 1.0487, minimum 1.0177. EUR to USD forecast on Wednesday, July, 6: exchange rate 1.0365 Dollars, maximum 1.0520, minimum 1.0210.
In 1 week, Euro to Dollar forecast on Thursday, July, 7: exchange rate 1.0322 Dollars, maximum 1.0477, minimum 1.0167. EUR to USD forecast on Friday, July, 8: exchange rate 1.0351 Dollars, maximum 1.0506, minimum 1.0196. Euro to Dollar forecast on Monday, July, 11: exchange rate 1.0376 Dollars, maximum 1.0532, minimum 1.0220. EUR to USD forecast on Tuesday, July, 12: exchange rate 1.0392 Dollars, maximum 1.0548, minimum 1.0236. Euro to Dollar forecast on Wednesday, July, 13: exchange rate 1.0335 Dollars, maximum 1.0490, minimum 1.0180.
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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