Forex Forecast: 8 – 12 August 2022
EURUSD Rates Week in Review
Last week, our technical indicators suggested to go Short at or above 1.01, setting a Stop Loss at 1.025, and to go Long at or below 1.01882, setting a Stop Loss at 0.98.
This week, EURUSD price range was 1.0295 high, set this past Tuesday, and 1.0122 low, set yesterday, Wednesday. So, the first trading opportunity came on Tuesday, when we could have short the currency pair at 1.025, Covering it on an intraday trading at 1.0165, for 0.83% profit. Wednesday, we could have Bought it at 1.0165, Covering it on an intraday trading at 1.01882, for 0.23% profit. Also, Wednesday, we could have Short it at 1.0208, Covering it on an intraday trading at 1.0124, for 0.82% profit. Thursday, we could have Short it at 1.0196, Covering it on an intraday trading at 1.0155, for an extra 0.4% ROI.
EURUSD has edged higher toward 1.0200 early Thursday after having registered small losses on Wednesday. Despite the latest recovery attempt, the euro remains vulnerable as long as buyers struggle to flip 1.0200 into support.
On Wednesday, several Fed policymakers pushed back against the idea of the Fed turning dovish and starting to lower rates in the second half of 2023. San Francisco Fed President Mary Daly said that markets were getting ahead of themselves by expecting rate cuts next year. Richmond Fed President Thomas Barkin noted that recession fears were slightly inconsistent with strong labor market conditions and St. Louis Fed President James Bullard added that he would want the policy rate to move up to the 3.75-4% rate this year. Following these comments, the CME Group FedWatch Tool shows that markets are now pricing in a nearly 50% probability of a 75 basis points rate hike in September.
Earlier in the day, the data from Germany showed earlier in the day that Factory Orders in Germany contracted at an annualized rate of 9% in June, compared to the market expectation for a decline of 6%. Later in the day, the US Department of Labor will publish the weekly Initial Jobless Claims data. The number of people who have applied for unemployment benefits has been rising steadily since early June and a higher than expected reading ahead of Friday’s Nonfarm Payroll report could cap the dollar’s upside. On the other hand, an unexpected decline should allow the USD to continue to outperform its rivals.
Meanwhile, investors will keep a close eye on the Bank of England’s (BOE) policy announcements. If the BOE adopts a dovish tone and triggers a GBP selloff, the euro could find it difficult to capture the capital outflows out of the pound. A hawkish BOE could weigh on the greenback but it wouldn’t be surprising to see the euro struggling to gain traction even in that scenario.
EURUSD stays below 1.0200 as dollar gathers strength. The currency pair is having a difficult time staging a recovery into the American session and continues to trade below 1.0200. The sharp decline witnessed in GBPUSD following BOE’s policy announcements helps the dollar gather strength against its rivals.
EURUSD was last seen trading slightly below 1.0200, where the 20-period and the 50-period SMAs align. In case that level stays intact, sellers could remain active and drag the pair to 1.0150 (Fibonacci 23.6% retracement of the latest downtrend) and 1.0100 (psychological level, static level).
If 1.0200 turns into support, 1.0230 (Fibonacci 38.2% retracement), 1.0275 (200-period SMA) and 1.0300 (Fibonacci 50% retracement) could be seen as the next bullish targets.
For next week, EURUSD is forming a local upward correction after a false breakdown of the 1.0000 area. I have marked an uptrend channel on the following chart, as price is currently testing trend support.
The price is renewing the local tops, but at the moment, it is difficult to break through the 1.0265 zone, I think that after the price settles above the support of the price channel, we might see the uptrend momentum again. I believe price can confidently rise from the channel support. On the following chart I have marked the nearest short-term target – resistance 1.0357.
Hence, our technical analysis are suggesting to go Short at or above 1.01, setting a Stop Loss at 1.0357, and to go Long at or below 1.02, setting a Stop Loss at 0.99.
As of 1:55 PM (GMT+1), the EURUSD was trading at 1.01934.
EUR to USD forecast for tomorrow: Euro to Dollar forecast on Friday, August, 5: exchange rate 1.0179 Dollars, maximum 1.0332, minimum 1.0026. EUR to USD forecast on Monday, August, 8: exchange rate 1.0087 Dollars, maximum 1.0238, minimum 0.9936. Euro to Dollar forecast on Tuesday, August, 9: exchange rate 1.0122 Dollars, maximum 1.0274, minimum 0.9970. EUR to USD forecast on Wednesday, August, 10: exchange rate 1.0152 Dollars, maximum 1.0304, minimum 1.0000.
In 1 week, Euro to Dollar forecast on Thursday, August, 11: exchange rate 1.0144 Dollars, maximum 1.0296, minimum 0.9992. EUR to USD forecast on Friday, August, 12: exchange rate 1.0227 Dollars, maximum 1.0380, minimum 1.0074. Euro to Dollar forecast on Monday, August, 15: exchange rate 1.0125 Dollars, maximum 1.0277, minimum 0.9973. EUR to USD forecast on Tuesday, August, 16: exchange rate 1.0129 Dollars, maximum 1.0281, minimum 0.9977. Euro to Dollar forecast on Wednesday, August, 17: exchange rate 1.0119 Dollars, maximum 1.0271, minimum 0.9967.
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.