EURUSD – Weekly Outlook for 3rd June 2022
Top Forex brokers have seen the market sentiment moving in favor of the US dollar as investors move their investments into a safe haven since the war in Ukraine continues and the Russian aggression increases against the people of Ukraine.
The European Union has been deliberating on the new sanction to impose on Russian seaborne export of oil and also refusing to pay for gas in Russian Ruble.
EURO and US News
German Inflation Rate YoY Prel (May) m/m
The German inflation records continue to rise higher as the EURUSD pair soars. The German price pressure hit a record of 7.9% for the annual inflation report, while on the monthly outlook, the inflation figure rose to 0.9% beating the forecast by some margins. In May, the German inflation was seen at 8.7% from the harmonized classification.
However, this report will likely put the ECB on a tight rope as they plan to bring the inflation level to a lower figure by increasing the interest rates while allowing the monetary policy to be loose to help the economic activity grow.
The Actual Rate is 7.9% above the forecast of 7.6% which was above the previous inflation data of 7.4%.
ISM Manufacturing PMI
Respondents are asked to rate the economic activities concerning the business conditions like Prices, new orders, employment, inventories, and supplier deliveries among other factors. Over 290 purchasing managers were asked the relevant questions during the survey on the manufacturing industry based on the level of diffusion. A figure above 5.0 is an indication that there is an expansion in the industry while a lower figure shows that there is a contraction in the industry.
The previous data was 55.4% and the forecast is 54.9%.
EURUSD Technical Analysis
Weekly Resistance Level: 1.19860, 1.22664, 1.19117
Weekly Support Level: 1.16989, 1.17530
On the weekly chart, the 15 May 2022 candlestick closed bullish and engulfed the 8 May 2022 candle. The bullish run was able to continue the previous week as the bulls were able to dominate the market for two weeks.
The 1.09300 and 1.08100 resistance zones are other areas the Indian forex traders will be observing as the price attempts to breakout above the 1.08100
The forex brokers selling the EURUSD pair have seen the trend run its impulsive wave with over 9.16% from the January 2022 high. However, can this bullish correction bring a reversal of the trend on the weekly chart or the bullish pullback will be a minor move? As the trading week progress, we shall see how the market will react around the zones.
Daily Chart Projections: Bearish,
Daily resistance levels 1.08001, 1.10000, 1.14948, 1.11709
Daily Support Levels 1.06100, 1.03357, 1.05143, 1.08059 1.11314.
The forex brokers had a shift in the market sentiment as of 13th May 2022 when the price hit the lowest low since 2016. The bias for the Indian forex traders was bullish because they expect the price to bounce away from the zone before any breakout.
The price broke out above the previous resistance zone of 1.06299 which is likely to act as a support when the price retests the zone if the bullish run is to continue on the daily time frame.
The EURUSD pair has been moving in a channel when you connect the highs from 10th February 2022 and 31 March 2022 with the lows of 27 January 2022, 04 March 2022, and 28 April 2022. The forex market shows that the forex brokers are shorting the pair on the trading platform. If the price should break out of the trendline connecting the highs, we may see the trend continue in a bullish direction.
H4 Intraday Chart Overview,
4 Hour Resistance levels 1.08000, 1.06299
4 Hour Support levels 1.04540, 1.05329
The H4 time frame has been making a series of higher highs and higher lows from 12 May 2022 when the support zone of 1.03536 was established. The Indian forex traders who intend to open long positions will wait for the price to get rejected at the 1.06299 level because the zone did act as resistance previously before it was broken.
The bullish forex brokers will have to hold the support zone (1.03522) for the price to continue the bullish rally and also the price needs to close above the new resistance level of 1.08000.
Another area of interest for the Indian forex traders is the price of the EURUSD pair hitting the upper part of the daily channel and we can see some degree of rejection around the resistance zone. A breakout of the trendline connecting the lows of 1.06478 (25th May), 20th May (1.05329), and 19th May 2022 (1.04605) will indicate that the short position traders are not done with the pair.
EURUSD Conclusion and Weekly Price Objectives
The ECB chief economist in the person of Philip Lane thinks that the ECB should not push for the 50basis point interest rate hike which some other central banks have done. He was suggesting that 25bp can be done in July and in September to move the benchmark out of the waters (negative territory).
Crowd sentiment remains bullish as the hawkish calls from the US Feds have been priced into the forex market. The EURUSD pair is still bearish on the daily chart and a close below the current support will take the price lower.