■ 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, the pair is currently short-term oversold. The market is mainly influenced by inflation data and expectations for upcoming interest rate decisions. At present, US macroeconomic data are stronger, which supports a weaker euro against the US dollar. This downtrend is expected to continue until November 2023.

Regarding interest rates, investors do not expect further hikes on either side of the Atlantic. Still, a final rate increase in the US cannot be completely ruled out.

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What happens to Interest Rates

□ The ECB has raised the euro interest rate to 4%, the highest level since the euro was introduced. However, Christine Lagarde stated that the current key rates are sufficient to bring inflation back to the long-term target. Investors interpreted this as “no more rate hikes,” causing the EURUSD to fall.

□ Across the Atlantic, the FED recently raised interest rates to 5.5%, the highest level in 22 years. According to the FedWatch Tool, the market expects no further hikes in 2023, with a likely rate cut starting in September 2024.

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Exclusive Technical Analysis Using the PriceMomentum Chart (EURUSD)

The following graph has two charts. The upper section shows a classic EURUSD chart (with RSI Precision), while the lower section shows a PriceMomentum chart for EURUSD. Note that PriceMomentum charts are published exclusively on TradingCenter.

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

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

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

📌 Notes:

(a) Regarding the monthly RSI Precision (upper chart), there was a strong rebound from the oversold level of -25 in 2022. Currently, it is at +45 and remains neutral.

(b) Regarding the PriceMomentum (lower chart), a strong descending channel has formed. In mid-2022, there was a first-ever crossunder, after which the exchange rate fell sharply. Currently, EURUSD is approaching the lower trend line of the price channel again, indicating that high volatility is likely.

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SUPPORT AND RESISTANCE LEVELS

Currently, EURUSD is heading 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

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EURUSD MACROECONOMIC OUTLOOK

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

Here are some key facts and figures for the US and the Eurozone:

Table: 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

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EURUSD PAIR SEASONAL STATISTICS

Here are the EURUSD statistics based on 18 years of research by TradingCenter. Historically, October tends to be bearish for EURUSD, while November—and especially December—are generally bullish months.

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

🔗 More Forex Market Statistics

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EURUSD ANALYSIS -Final Words

EURUSD will likely continue to move lower in the coming weeks, as Eurozone macroeconomic data remain weak. However, a strong rebound is expected toward the end of the year, possibly starting in the second half of November.

 

■ Free Forex Trading Signals: EURUSD September-November 2023

Giorgos Protonotarios, Financial Analyst,

for TradingCenter (c) -Nothing posted constitutes investment advice

September 19th, 2023