EUR/USD forecast – rates, charts and analysis
- EUR/USD is falling towards 1.1100.
- Fed blackout period ahead of next week’s FOMC meeting.
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The US dollar rose this week and is currently trading about 150 pips higher than this week’s low of 99.50. Recent US economic data was marginally better than expected, while the US Dollar Index was boosted by a bout of weakness in a group of basket currencies. With no Fed speakers even after next Wednesday’s FOMC policy decision, the US dollar may consolidate its gains this week ahead of the Fed’s decision.
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US Dollar Index Daily Chart – Jul 21, 2023
Calendar of Central Bank policy meetings
Next week, there will be two central bank policy meetings that will guide EUR/USD in the coming weeks. The Federal Reserve is expected to announce a 25 basis point rate hike on Wednesday 26 July at 19:00 UK time, while the European Central Bank is also expected to raise interest rates by a quarter point the next day at 13:15 UK time. Both central banks will hold press conferences 30 minutes after announcing their decisions, and these conferences will be key to any clues to future action by both the Fed and the ECB. This will be a volatile time for EUR/USD traders.
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Basics of breakout trading
EUR/USD is now fading towards a previous resistance-turned-support at 1.10956 with horizontal support below at 1.10758 protecting the February swing high of 1.10328. This last level should hold if it is tested before the two central bank meetings.
EUR/USD daily price chart – July 21, 2023
Chart via TradingView
|
change in |
Longs |
Shorts |
Hey |
| Daily | -5% | -1% | -2% |
| weekly | 44% | -18% | -4% |
Retail traders remain short but are net buyers of EUR/USD
Retail trader data shows that 33.36% of traders are net long with the short to long ratio at 2.00 to 1, the number of long traders is 24.45% higher than yesterday and 32.35% higher than last week, while the number of short traders is 18.43% lower than yesterday and 10.29% lower than last week.
We usually take a view contrarian to crowd sentiment, and the fact that traders are short of the position suggests that EUR/USD prices could continue to rise. However, traders are net less than yesterday and compared to last week. Recent changes in feelings warn that the current EUR/USD price trend may reverse bearish soon despite the fact that traders are still net short.
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