Forex Forecast: 7 – 11 November 2022
EURUSD Rates Week in Review
Last week, our technical indicators suggested to go Short on the EURUSD at or above 0.99, setting a Stop Loss at 1.02, and to go Long at or below 0.9853, setting a Stop Loss at 0.97.
This week, EURUSD price range was 0.9977 high, set yesterday, Wednesday, and 0.9730 low, set today. So, Monday, we could have short the currency pair at 0.9964, covering it on an intraday trading at 0.9874, for 0.9% profit. Tuesday, we could have short it at 0.9953, covering it on an intraday trading at 0.9854, for 0.99% profit. Wednesday, we could have bought it at 0.9732, selling it on an intraday trading at 0.9837, for 1.08% profit. Also, Wednesday, we could have short it at 0.9975, covering it on an intraday trading at 0.9810, for 1.65% profit. Thursday, we could have bought it at 0.9732, selling it on an intraday trading at 0.9837, for 1.08% profit. Also, Thursday, we could have short the currency pair at 0.9837, covering it on an intraday trading at 0.9732, for an extra 1.08% ROI.
After having surged toward parity with the initial reaction to the Federal Reserve’s policy statement, EURUSD made a sharp U-turn and closed deep in negative territory on Wednesday. The pair has failed to stage a meaningful rebound and extended its slide early Thursday. The technical outlook shows sellers continue to dominate EURUSD’s action and additional losses toward 0.9700 could be witnessed unless the pair manages to stabilize above 0.9820. The Federal Reserve raised its policy rate by 75 basis points but this decision by itself was ignored by market participants as it was already priced in. In the policy statement, the US central bank noted policymakers would take into account “cumulative tightening, policy lags and economic and financial developments” in determining the pace of rate hikes. This comment triggered a dollar selloff as it was assessed as a convincing sign that the Fed could opt for a smaller rate increase in December.
During the press conference, however, FOMC Chairman Jerome Powell noted that he expected the terminal rate to be revised higher in December’s Summary of Economic Projections. The chairman explained that their message to markets was that it was more important for them to reach the top end of the policy rate rather than the size or the speed of rate increases. Powell’s comments caused US stock indices to suffer heavy losses and provided a boost to Treasury bond yields. In turn, the dollar regather its strength and easily continued to outperform its rivals.
US stock index futures trade modestly lower early Thursday and another selloff in Wall Street after the opening bell could force EUR/USD to extend its slide. The US economic docket will feature the weekly Initial Jobless Claims and the ISM Services PMI report for October but investors are likely to stay focused on the impact of the Fed event on markets.
Meanwhile, European Central Bank (ECB) President Christine Lagarde noted that they have to be attentive to spill-over from the Fed policy but this comment doesn’t seem to be helping the shared currency find demand in a meaningful way.
EURUSD stays under bearish pressure and trades deep in negative territory below 0.9800 on Thursday. ECB President Lagarde’s comments failed to help the euro find demand as investors await the BoE policy announcements and mid-tier data releases from the US.
EURUSD continues to trade below the descending trend line coming from October 27 and the Relative Strength Index (RSI) indicator stays within a touching distance of 30. In case the pair stages a technical correction, it is likely to face initial resistance at 0.9800 (psychological level) before 0.9820 (200-period SMA).
Only a four-hour close above the latter could discourage sellers and open the door for an extended recovery toward 0.9860 (descending trend line, 100-period SMA).
On the downside, 0.9740 (psychological level) aligns as interim support before 0.9700 (psychological level, static level) and 0.9630 (Oct. 13 low).
For next week, as illustrated in the following 4-hour chart, our technical analysis are suggesting to go Short on the EURUSD at or above 0.97676, setting a Stop Loss at 0.98693, and to go Long at 0.97999, setting a Stop Loss at 0.95550.
As of 12:47 PM (GMT), the EURUSD was trading at 0.97424.
EUR to USD forecast for tomorrow: Euro to Dollar forecast on Friday, November, 4: exchange rate 0.9758 Dollars, maximum 0.9904, minimum 0.9612. EUR to USD forecast on Monday, November, 7: exchange rate 0.9754 Dollars, maximum 0.9900, minimum 0.9608. Euro to Dollar forecast on Tuesday, November, 8: exchange rate 0.9674 Dollars, maximum 0.9819, minimum 0.9529. EUR to USD forecast on Wednesday, November, 9: exchange rate 0.9671 Dollars, maximum 0.9816, minimum 0.9526.
In 1 week, Euro to Dollar forecast on Thursday, November, 10: exchange rate 0.9564 Dollars, maximum 0.9707, minimum 0.9421. EUR to USD forecast on Friday, November, 11: exchange rate 0.9763 Dollars, maximum 0.9909, minimum 0.9617. Euro to Dollar forecast on Monday, November, 14: exchange rate 0.9777 Dollars, maximum 0.9924, minimum 0.9630. EUR to USD forecast on Tuesday, November, 15: exchange rate 0.9849 Dollars, maximum 0.9997, minimum 0.9701. Euro to Dollar forecast on Wednesday, November, 16: exchange rate 0.9862 Dollars, maximum 1.0010, minimum 0.9714.
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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