Corrective advance may continue, but the EUR is doomed
The EUR/USD pair started last week on the back foot, falling to a fresh 22-year low of 0.9535. It changed course mid-week to post substantial gains and then settling at around the 0.9780 threshold. In this article, we’ll detail EUR/USD Weekly Technical Forecast for Week 40, 2022.
Volatility was once again triggered by inflation-related concerns and prospects for a global economic downturn amid central banks’ massive quantitative tightening (QT) effort. As price pressures continue, policymakers from around the world embarked on liquidity-draining processes, which in turn, undermined economic progress.
EUR/USD technical outlook
The EUR/USD pair hit 0.9853 before retreating on Friday. It ends up way below the 38.2% retracement of the 1.0197/0.9535 slide, at around 0.9790. The 23.6% Fibonacci retracement provides support at 0.9685.
Technical readings in the weekly chart show that EUR/USD has barely begun correcting extreme oversold conditions. Indicators remain at extreme levels with the RSI at 29, but losing bearish strength and are mostly flat. Meanwhile, the 20 SMA maintains its firmly bearish slope far above the current level, running parallel with a descending trend line coming from this year’s high at 1.1494. The trend line will provide resistance at around 1.0070 in the upcoming days.
Bears never lost control, according to the daily chart. The pair held throughout the week below a bearish 20 SMA, currently at around 0.9890. The longer moving averages kept heading south far above the shorter one. Meanwhile, technical indicators corrected extreme oversold conditions before resuming their declines within negative levels. They head into the weekend with a strong downward momentum that hints at further declines.
A break below the aforementioned 0.9685 level should confirm the bearish case, with the pair finding support later at 0.9600 and 0.9535. If the latter gives way, 0.9400 is the next probable bearish target. On the other hand, if the pair manages to run past 0.9870, chances are of another corrective advance towards the 1.0030/70 price zone.
EUR/USD sentiment poll
The Instaforex Nigeria for the EUR/USD pair hints at an extension of the bullish correction, with the pair anyway seen trading below parity for the rest of the year. The near-term outlook is neutral, as bulls and bears are equally 42%. Bulls take the lead in the monthly and quarterly views but remain below 50% of the polled experts. On average, the pair is barely seen above 0.9800 in the next few weeks while approaching the 0.9900 level in the three-month view.
The Overview chart shows that the near-term moving average has lost its bearish strength and turned flat, but also that the longer ones maintain their bearish slopes. Dismissing some wild bets, the pair is seen on average between 0.9500 and 1.0400 in the upcoming months
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