Weekly Forex Forecast: 04 – 08/11 2019
How to use the basic technical analysis concepts we have shared with you to predict the next week’s currency pair price movement
GBP Rates Week in Review
Last Thursday and throughout this week, our technical and fundamental analysis were waiting to sell the GBPUSD between 1.29522 and 1.29517 and buy it back between 1.2864 and 1.2733, while matching RSI at or above 75. This Monday and Tuesday, the GBPUSD got close to trigger our short position when it resumed the downward trend, due to the extension of Brexit news, when it got the daily high of 1.29407 and 1.29075, respectively. However, yesterday, Wednesday, we finally got the GBPUSD within the previously technical selling indicator range, when it reaches the intraday high of 1.29758, but the RSI is still below 75 (67.17), hence it did not trigger the suggested short position on the GBPUSD. As of this Thursday, October 31st, at 16h53m GMT GBPUSD was at 1.29408.
Three days ago, Monday, we finally got the PM to formally accept the EU’s offer of a Brexit extension until 31 January 2020 agreed earlier on Monday. Brexit breakthrough? Amid signs that UK Prime Minister Boris Johnson was seeking a new Irish border compromise with the support of Northern Ireland’s DUP, the British Pound soared as a short-covering rally propelled it to the top of the standings as the top-performing major currency last week. It appears that the UK parliament’s last-minute efforts to derail a no-deal, hard Brexit prior to being prorogued may have worked. GBPJPY was the best performing GBP-cross, gaining 2.81%, while the other safe-haven crosses, GBPCHF and GBPUSD, added 2.03% and 1.74%, respectively. Even as higher-yielding and high beta assets proved strong thanks to falling interest rate cut odds among the G10 currencies’ central banks, the British Pound proved formidable versus the commodity currencies, with GBPCAD and GBPNZD adding 2.59% and 2.42%, respectively. Meanwhile, GBPAUD gained 1.27%, the worst-performing GBP cross. On the other hand, EU Council President Donald Tusk said what was being offered was a “flextension”, meaning the UK could leave before the deadline if a deal was approved by Parliament. It comes as MPs prepare to vote on the PM’s proposals for an early general election on 12 December. The SNP and Lib Dems have also proposed an election – on 9 December. The vote is expected after 1900 GMT.
Trick or treat? Brexiteers may feel tricked on Halloween, which was supposed to be Brexit Day, the third one. GBP/USD is on the rise, but the main driver is the US Federal Reserve rather than any UK event. The Fed cut interest rates for the third time as expected and signalled a pause. The US Dollar advanced at first, but then changed course and fell, as Chair Jerome Powell indicated that the bar for raising rates is high. The bank would like to see a significant rise in inflation before hiking, while the threshold for cutting again seems lower. Earlier, the US reported a growth rate of 1.9%, a marginal slowdown as the consumer continues pulling the economy forward, but manufacturing is struggling. ADP’s private-sector jobs report pointed to a drop in hiring and shapes expectations for Friday’s Non-Farm Payrolls.
Going forward, in our humble opinion, the fundamental forecast for the British Pound is now neutral as Brexit talks persist, the BOE remains sidelined. And with the UK parliament prorogued, all attention is on UK PM Johnson’s talks with his EU counterparts. Even though, a short-covering rally is possible for the British Pound, as futures markets remain heavily net-short.
Hence for the month of November, we are picking a new trading currency pair: EURUSD. Because we like liquidity, we make notice to our readers that the EURUSD accounts for 27% of all Forex trading.
Even though, EUR/USD IG Client Sentiment, our data shows traders are now net-short EUR/USD for the first time since Jul 01, 2019 when EUR/USD traded near 1.13, we see it as a contrary indicator. Hence, we are bullish on the EUR USD.
To confirm our bullish technical indicator we, would like to see in the coming few days a consolidation on the EURUSD at around 1.11419, which will form a technical “cup and tea” formation, reaffirming our bullish trend on this currency pair.
For next week, from November 4 to November 8, we would buy the EURUSD at S1 or between 1.1070 and 1.1060 and sell it at R1 or between 1.1277 and 1.1178.
EUR to USD forecast for tomorrow, and next week.
Euro to Dollar forecast on Friday, November, 1: exchange rate 1.1198 Dollars, maximum 1.1366, minimum 1.1030. EUR to USD forecast on Monday, November, 4: exchange rate 1.1210 Dollars, maximum 1.1378, minimum 1.1042. Euro to Dollar forecast on Tuesday, November, 5: exchange rate 1.1232 Dollars, maximum 1.1400, minimum 1.1064. EUR to USD forecast on Wednesday, November, 6: exchange rate 1.1205 Dollars, maximum 1.1373, minimum 1.1037.
In 1 week Euro to Dollar forecast on Thursday, November, 7: exchange rate 1.1178 Dollars, maximum 1.1346, minimum 1.1010. EUR to USD forecast on Friday, November, 8: exchange rate 1.1186 Dollars, maximum 1.1354, minimum 1.1018. Euro to Dollar forecast on Monday, November, 11: exchange rate 1.1161 Dollars, maximum 1.1328, minimum 1.0994. EUR to USD forecast on Tuesday, November, 12: exchange rate 1.1140 Dollars, maximum 1.1307, minimum 1.0973. Euro to Dollar forecast on Wednesday, November, 13: exchange rate 1.1183 Dollars, maximum 1.1351, minimum 1.1015.
Again, remember to place stop losses, according to your risk tolerance as unexpected news coming to the market may significantly affect trends and prices. Until the next article, wealthy trading.
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. Further, 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 Tony Ferreira nor KeySoft. 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. Past investment results of any underlying managers should not be viewed as indicative of the future performance of the EUR/USD.