■ Market: Foreign Exchange | EURUSD

■ Forecast: The US Dollar looks currently stronger, EURUSD to rebound in November

Since July 2023, the EURUSD has been moving lower. However, we must point out that the pair is short-term oversold. The EURUSD market is mainly driven by inflation figures and the anticipation of the next interest rate decisions. Currently, the macroeconomic data in the US are looking better, and that creates the notion of a declining euro against the US dollar. This downtrend is expected to last until November 2023.

Regarding interest rates, investors expect no more rate hikes (on both sides of the Atlantic). Nevertheless, we cannot rule out the possibility of a final rate hike in the US.

What happens with Interest Rates

□ The ECB has raised the euro interest rate to 4%, or else to the highest level since the launch of the euro. However, Christine Lagarde said that the current key rates are sufficient to contribute to the return of inflation to the long-term target. A statement that was translated by investors as “no more rate hikes”, and the EURUSD started to tank.

□ Across the Atlantic, FED has recently raised interest rates to the highest level of the past 22 years, at 5.5%. According to the FedWatch Tool, the market anticipates no more rating hikes in 2023, and most probably, a decline starting in September 2024.

 

TECHNICAL ANALYSIS (PriceMomentum chart on EURUSD)

The following graph consists of two charts, a classic EURUSD chart (with RSI Precision), and a PriceMomentum chart on EURUSD.

(1) UPPER: monthly EURUSD chart with RSI Precision (learn more about TradingCenter's RSI Precision)

(2) LOWER: PriceMomentum Chart (learn more about the TradingCenter's PriceMomentum chart) with SMA(233)

Chart: Monthly Chart & PriceMomentum Chart on EURUSD (2020-2023)

□ As concerns the monthly RSI Precision (upper chart), there was a strong rebound at the oversold level of -25 in 2022, currently, it is found at +45 and remains neutral.

□ As concerns the PriceMomentum (lower chart), a strong descending channel is formed. As we can see, there was a first-ever crossunder in mid-2022, and the exchange rate tanked in the following weeks. Currently, EURUSD is reaching again the lower trend line of the price channel. This means that high volatility is to be expected.

 

SUPPORT AND RESISTANCE LEVELS

Currently, EURUSD is heading lower lower, however, it is short-term oversold. These are some critical support and resistance levels for EURUSD.

■ Strong Supply Levels (Resistance):

(↑) 1.1410 (very-strong)

(↑) 1.1220-1.1270 (multiple-resistances)

(↑) 1.1020-1.1070 (multiple-resistances)

(↑) 1.0835-1.0855

(↑) 1.0750-1.0770 (short-term)

■ Strong Demand Levels (Support):

(↓) 1.0640-1.0630 (short-term, but important)

(↓) 1.0545-1.0535

(↓) 1.0435

(↓) 1.0230-1.0255

(↓) 0.9895

 

EURUSD MACROECONOMIC OUTLOOK

In the Eurozone, the ECB projects an average inflation of 5.6% in 2023, 3.2% in 2024 and 2.1% in 2025. In the US, annual inflation gradually declined in June 2023, but it accelerated in July and August.

These are some key facts and figures regarding the US and Eurozone:

Comparing United States and Eurozone Economic Figures and Forecasts

ECONOMIC INDICATORS		USA	EUROZONE
GDP (actual 2022)	USD Billions	25,460	16,805
GDP Growth (2023 Forecast)	%	2.2	0.7
GDP Growth (2024 Forecast)	%	0.8	1.0
Interest Rate	%	5.5	4.5
Inflation Rate 2023	%	3.7	5.6
Unemployment Rate 2023	%	3.8	6.4
Money Supply M1	USD Billions	18,447	11,332
Money Supply M0	USD Billions	5,517	16,072
Money Supply M2	USD Billions	20,903	17,026
Central Bank Balance Sheet	USD Billions	8,099	7,632
Loans to Private Sector	USD Billions	2,756	5,492
Foreign Exchange Reserves	USD Billions	371	84

 

EURUSD STATISTICS

Here are the Statistics for EURUSD based on 18 years of research by TradingCenter. Historically, October is a bearish month for EURUSD, however, November and especially December are considerably bullish months.

MONTH	TIMES		RETURN
	↑	↓
OCTOBER	7	11	-0.70%
NOVEMBER	9	9	+0.12%
DECEMBER	11	7	+1.40%

► More Statistics Here

 

EURUSD ANALYSIS -Final Words

Probably, EURUSD will continue to move lower in the upcoming weeks, as the macroeconomic data are weaker in the Euro area. However, a strong rebound for EURUSD is expected to occur as the year ends, maybe starting in the second half of November.

 

■ Free Forex Trading Signals: EURUSD September-November 2023

Giorgos Protonotarios, Financial Analyst,

TradingCenter (September, 19th 2023) *Nothing posted constitutes investment advice