EURUSD Forecast: 1.850 is Crucial
EURUSD is trading lower at the time of this writing after being held in a range for the past several days. Part of the reason for the recent selling is the spread of the Delta variant.
The VIX is still fairly low, further gains however may spell a different outlook for Euro Dollar. We will discuss EURUSD technical forecast based on the daily chart and explain why the leading indices are still holding firm.
In the past when covid19 first began spreading market conditions were altered. At the time of this writing this is not the case.
We will focus with EURUSD daily chart.
Click on the chart to enlarge:
Based on the daily chart, EURUSD forecast is fairly grim. The resistance at 1.1950 was tested on multiple occasions and held firm. The recent break lower may be an indication that further weakness is in store.
EURUSD Technical Analysis
The market’s concern with the Delta variant is that it may dent the economic recovery. With cases doubling across Germany, the Euro may be in for some volatility. There is a golden rule we use for all the forex signals we provide. Once the trend begins we can no longer initiate the trade.
Attempting to sell EURUSD at current levels based solely on the daily chart comes with great risks. Any profit taking on the recent leg lower may translate into some drawdown.
Should EURUSD manage to break under 1.1850 it may then provide some decent sell signals. It will also allow a tighter stop to be layered. It does require monitoring, best combined with intraday time frames.
What must also bear in mind in the EURUSD forecast are the Fed and the European Central Bank (ECB). Central banks may not hesitate to loosen their monetary policies. We suspect this is the reason why the leading indices are held firm despite some risk aversion in the Forex market.
EURUSD Relevant News
The most relevant news to EURUSD is the delta variant’s spread, mainly across Europe. If more countries will announce new lockdown measures, there will be some expectations for central banks to act. Should the central banks disappoint and we have seen this in the past, the market reaction may be more aggressive.
What may be more attractive is EUR against the commodity currencies, EURAUD, EURNZD and EURCAD. Once the market sentiment is dented, these currencies may be knocked lower than other currencies.
Traders that rely on automated systems or indicators, should the market conditions change it will affect many strategies. It is important to learn how to adapt to changing market conditions and fast. Because of these rapid changes many traders may be caught off-guard.
The key price levels for EURUSD are 1.1850 and 1.1950. Intraday technical levels are irrelevant at the time of this writing.
Last Updated on August 31, 2021