Forex Forecast: 8 – 12 November 2021
EURUSD Rates Week in Review
Last week, our technical indicators suggested to Short the currency pair at or above 1.16263, setting a Stop Loss at 1.16686, and to go Long at or below 1.1550, setting a Stop Loss at 1.15252.
This week, EURUSD price range was 1.1617 high, set yesterday and today, and 1.1544 low, set today, Thursday. So, Monday, we could have bought the currency pair at 1.1547, selling it on an intraday trading at 1.1608, for 0.53% profit. Today, we could have bought it at 1.1546, selling it at 1.1615, for an extra 0.6% ROI.
EURUSD has turned south following Wednesday’s modest rebound and started to move toward 2021 lows today, Thursday.
European Central Bank (ECB) policymakers’ comments on the rate outlook and the US Federal Reserve’s decision to reduce monthly asset purchases highlighted the diverging policies between these central banks. ECB President Christine Lagarde said on Wednesday the conditions needed for the bank to hike its policy rate was “very unlikely” to be satisfied next year. On a similar note, “ECB’s forward guidance does not support the market view of a first interest rate hike in the third quarter of 2022 nor any time soon afterwards,” noted ECB Governing Council member Pablo Hernandez de Cos. Finally, Governing Council member Francois Villeroy de Galhau reflected the same sentiment by stating that there is no need for the ECB to raise its policy rate next year.
On the other hand, the Fed decided to reduce its asset purchases by $15 billion per month, starting in mid-November. FOMC Chairman Jerome Powell reiterated that they would not automatically hike the policy rate when the quantitative easing program ends but that comment doesn’t seem to be having a noticeable impact on the market expectation.
According to the CME Group Fed-Watch Tool, markets are pricing a 61.5% chance of a rate increase by June 2022, virtually unchanged from the day before.
As it currently stands, EURUSD recovery attempts are likely to be technical in nature and remain limited with fundamentals favoring the dollar over the common currency.
EURUSD closes in on 2021 lows on unabated dollar strength, coming under renewed bearish pressure during the European trading hours on Thursday and started to edge lower toward the 2021-low it set at 1.1524 on October 12. Reflecting the broad-based dollar strength, the US Dollar Index erased Wednesday losses and climbed above 94.20.
The 2021-low set at 1.1524 aligns as the next target on the downside. With a decisive move below that support, the pair could extend its slide toward 1.1500 (psychological level) and 1.1440 (previous resistance). Meanwhile, the Relative Strength Index (RSI) indicator on the four-hour chart is now around 40, suggesting that there is more room on the downside before the pair becomes technically oversold.
On the other hand, the first resistance is located at 1.1600 (psychological level) before 1.1620 (200-period SMA, 100-period SMA, Fibonacci 23.% retracement of September downtrend). In case buyers manage to lift the price above the latter, the next hurdle could be seen at 1.1670 (Fibonacci 38.2% retracement).
For next week, according to our technical analysis illustrated in the following 4-hour chart, all the month of October, EURUSD has traded in a range, hoovering around 1.15-1.16 zone. This zone has acted as either support or resistance over the years.
Long term trend for the pair has changed in 2020, once EURUSD has broken above the falling trend line and the drop from 1.25 is just a correction to the overall bullish trend . For a positional trader can be a good opportunity for a buy trade in the long run and, also, such a trade can have a great ROI, if 1.25 is targeted.
As of 12:43 PM (GMT), the EURUSD was trading at 1.15565.
EUR to USD forecast for tomorrow: Euro to Dollar forecast on Friday, November, 5: exchange rate 1.1649 Dollars, maximum 1.1824, minimum 1.1474. EUR to USD forecast on Monday, November, 8: exchange rate 1.1622 Dollars, maximum 1.1796, minimum 1.1448. Euro to Dollar forecast on Tuesday, November, 9: exchange rate 1.1672 Dollars, maximum 1.1847, minimum 1.1497. EUR to USD forecast on Wednesday, November, 10: exchange rate 1.1546 Dollars, maximum 1.1719, minimum 1.1373.
In 1 week, Euro to Dollar forecast on Thursday, November, 11: exchange rate 1.1626 Dollars, maximum 1.1800, minimum 1.1452. EUR to USD forecast on Friday, November, 12: exchange rate 1.1633 Dollars, maximum 1.1807, minimum 1.1459. Euro to Dollar forecast on Monday, November, 15: exchange rate 1.1618 Dollars, maximum 1.1792, minimum 1.1444. EUR to USD forecast on Tuesday, November, 16: exchange rate 1.1586 Dollars, maximum 1.1760, minimum 1.1412. Euro to Dollar forecast on Wednesday, November, 17: exchange rate 1.1601 Dollars, maximum 1.1775, minimum 1.1427.
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.