Forex Forecast: 9 – 13 May 2022

 

EURUSD Rates Week in Review

Last week, our technical indicators suggested to go Long at or below 1.08, setting a Stop Loss at 1.05, and Short it at or above 1.09459, setting a Stop Loss at 1.11748.

This week, EURUSD price range was 1.0642 high, set today, Thursday, and 1.0491 low, set this past Monday and Tuesday. So, Monday, we could have bought the currency pair at 1.05, selling it on an intraday trading at 1.0565, for 0.62% profit. Tuesday, we could have bought it at 1.05, selling it on an intraday trading at 1.0577, for 0.73% profit. Wednesday, we could have bought it at 1.0508, selling it on an intraday trading at 1.0629, for 1.15% profit. Today, Thursday, we could have bought it at 1.0597, selling it on an intraday trading at 1.0640, for an extra 0.41% ROI.

 Fundamental Overview

Fed chair Jerome Powell dictated the roadmap of balance sheet reduction along with a rate hike by 50 basis points (bps). The intention is to squeeze liquidity from the economy at a much faster pace by curtailing the whooping size of the $9 trillion balance sheet. A reduction in the balance sheet will be done by cutting $95 billion worth of assets ($60 billion of Treasuries and $35 billion of mortgage-backed securities (MBS)) monthly. Compared to the pace of the balance sheet reduction program initiated in 2017-2019 in which $50 billion worth of assets were targeted to reduce monthly. It states that the Fed is culling its assets at double the pace of the 2017-19 period.

Considering the multi-decade high inflation, it looks like the collaborative effort of rate hikes and quantitative easing is highly required to curb the inflation mess.

Meanwhile, the shared currency is expected to face the headwinds of oil supply as the European Union (EU) is looking to embargo oil from Russia within six months. Moving to another supplier or group of suppliers for 3.5 million barrels per day (bps) won’t be a cakewalk for the trading bloc. This could trigger the fears of a higher jobless rate further.

Going forward, the action in the asset will be handed over to the US economic data. The US Nonfarm Payrolls (NFP) will release on Friday and are expected to land at 394k against the prior print of 431k.

Technical Analysis

UR/USD is dropping below 1.0600, as the US dollar recovers from the Fed-induced blow. The Fed turned out less aggressive than expected, ruling out a 75 bps June rate hike. The EU embargo on Russian oil and ECB Panetta’s remarks are weighing on the euro.

 

EURUSD bulls seem running out of steam after rising the most since early March, taking rounds to 1.0610-15 during Thursday’s Asian session. The major currency pair’s latest weakness could be linked to the overbought conditions of the RSI (14).

Even so, the quote holds onto the previous day’s breakout of the 200-HMA, as well as multiple levels marked by a fortnight-long horizontal area, surrounding 1.0590-95. Hence, EUR/USD remains on the buyer’s radar unless breaking the 1.0590 level.

Should the pair drops below 1.0590, a one-week-old rising support line, around 1.0515, may offer an intermediate halt during the fall targeting the latest multi-month low of 1.0471.

 For next week, and as predicted in our last week’s article, the EURUSD has consolidated throughout this week between 1.0642 and 1.0491. Hence, I think the market conditions are right for the currency pair to move up. So, next week, our technical analysis is recommending to go Long at or below 1.08509, setting a Stop Loss at 1.05, and Short it at or above 1.08536, setting a Stop Loss at 1.09732.

 

As of 8:23 AM (GMT), the EURUSD was trading at 1.06014.

 

EUR to USD forecast for tomorrow: Euro to Dollar forecast on Friday, May, 6: exchange rate 1.0728 Dollars, maximum 1.0889, minimum 1.0567. EUR to USD forecast on Monday, May, 9: exchange rate 1.0743 Dollars, maximum 1.0904, minimum 1.0582. Euro to Dollar forecast on Tuesday, May, 10: exchange rate 1.0752 Dollars, maximum 1.0913, minimum 1.0591. EUR to USD forecast on Wednesday, May, 11: exchange rate 1.0695 Dollars, maximum 1.0855, minimum 1.0535.

 

In 1 week, Euro to Dollar forecast on Thursday, May, 12: exchange rate 1.0610 Dollars, maximum 1.0769, minimum 1.0451. EUR to USD forecast on Friday, May, 13: exchange rate 1.0537 Dollars, maximum 1.0695, minimum 1.0379. Euro to Dollar forecast on Monday, May, 16: exchange rate 1.0452 Dollars, maximum 1.0609, minimum 1.0295. EUR to USD forecast on Tuesday, May, 17: exchange rate 1.0418 Dollars, maximum 1.0574, minimum 1.0262. Euro to Dollar forecast on Wednesday, May, 18: exchange rate 1.0403 Dollars, maximum 1.0559, minimum 1.0247.

 

 

 

 

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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