EURUSD Long Term Forecast
The EUR/USD pair has been in a multi-year downtrend and is currently at a neutral level. However, the price of the currency is forecast to continue rising in years to
come. While this is a very optimistic outlook, there are some risks involved.
EUR/USD price movement within a multi-year downtrend
There are many factors that play a part in the EUR/USD price movement. This is why it is important to be up-to-date on the latest global events in order to make the best possible predictions.
The EUR/USD is an important currency pair that affects the entire Forex market. While it is often a good indicator of the state of the US economy, it is also susceptible to the macroeconomic statistics of the entire Eurozone. Aside from the fundamentals that matter to all currency pairs, price action can often break the lower bound. For example, the EUR/USD has been trading in a multi-year downtrend for a long time.
Although the EUR/USD rate is in a multi-year downtrend, it is a fairly well-known fact that it can bounce to the upside and back. It is also important to understand that the rate is subject to a number of interest rate differences.
Among other things, the EUR/USD has been moving upward for the past several months, thanks to the ECB’s aggressive rate hikes. As a result, borrowing costs have reached multi-year highs.
Unlike the previous month’s rate increase, the European Central Bank announced a 75-basis point rate increase on Oct. 27, a move that could cause the dollar to weaken. In addition, ECB officials suggested a slow, but steady rate hike path. In the longer term, the Euro/US Dollar rate will be confined to a range of 1.06 – 1.15 USD. Short-term price movements will be limited, but the euro will continue to gain ground in the coming months.
The EUR/USD has been a thorn in the side of the Dollar for a while now, but the recent bounce to the upside has provided a glimmer of hope.
EUR/USD pair is expected to continue rising in years following 2028
The euro has regained strength in recent weeks and has held above 1.0600 for the past two weeks. The European Central Bank has been hiking interest rates to combat rampant inflation. These rate hikes have given the euro a slight boost and are likely to keep the pair above parity. However, there are a number of factors that will ultimately determine the value of the currency.
Inflation has been rising since the start of the year. Despite a weakening dollar, the euro has been impacted by an energy crisis in Europe and growing concerns over the eurozone economy.
As a result of this inflationary climate, the euro could fall below parity with the dollar. It is not certain that this will happen, but it is likely. Unless the euro finds a way to reverse its downward trajectory, it will continue to be impacted by the ECB’s interest rate hikes.
Inflation in the United States is forecasted to reach its pandemic peak in June. This will further bolster expectations of a second consecutive 75 basis point increase from the Fed. But even if the Fed does not raise rates this month, the US consumer price index (CPI) is expected to rise 8.8%.
This will put further downward pressure on the dollar. Meanwhile, the euro is facing a number of challenges, including ECB interest rate hikes and a cost-of-living crisis. Inflation is forecasted to remain high in the eurozone in 2022. But the outlook for the next few years is much less promising.
Global GDP is projected to grow 3.4% this year. But trade volume growth will limit gains of pro-cyclical currencies in the short-term. However, inflation in the eurozone is expected to remain above the ECB’s target level. ECB officials are also expected to tighten liquidity conditions through further policy hikes.
MACD divergence suggests weakness in an existing up trend
MACD divergence is a situation when the MACD and price don’t move in the same direction. It occurs when prices pull back from an uptrend and start to trend in a slower pace. The MACD will gravitate toward the zero line as the momentum of the price declines.
Regardless of whether you’re long or short on the market, MACD divergence signals can help you spot weaknesses in the current trend. Using this indicator can allow you to take defensive positions to limit volatility. You can also use it as a trend indicator, but be warned that the MACD isn’t a reliable signal for all reversals. Divergence can occur in several different forms, depending on the situation. The most common type of divergence is positive. When price makes a higher high while the MACD remains at its lowest low, you’ll get a positive signal. This is a common occurrence in triangle patterns and sideways patterns.
Another form of divergence is bearish. When the MACD starts to rise from below zero, you’ll get a bearish signal. A bearish divergence can take many forms. Sometimes the MACD will make a lower High, sometimes a lower Low. Typically, bearish divergences precede a price reversal. In addition to being a negative signal, they can alert you to an impending peak. Traders can combine bearish MACD signals to create stronger and more robust signals.
Often, the signal line for the MACD will also crossover the signal line for the moving average. This can produce multiple false signals. If you’re looking for a stronger signal, however, it’s best to look for a longer and sharper divergence. Regardless of the type of divergence, you should avoid jumping out of your trades because of the signal. Instead, you should analyze the underlying trend and study past situations to better prepare for what might happen in the future.
EUR/USD pair is turned neutral with current retreat
The EUR/USD is currently in a neutral position as the pair is trading below a descending trend line. This is an example of a corrective phase. A strong support for the pair can be found at a 20 SMA level at around 1.0510. While the pair is below this line, there is still some room for upside. Traders must be cautious when considering this move as the pair is in a weaker state than it was just a few days ago.
In the meantime, the US Dollar is gaining ground in global markets. This is likely to continue as global risk aversion continues to fuel a safe haven buck. However, the EUR/USD may be experiencing a new round of weakness as the pair trades under heavy selling pressure. Markets will be waiting on the outcome of the EU summit to see whether or not European leaders will agree to strong measures to ease the debt crisis in the euro zone.
The ECB is also scheduled to release its decision later this week. Investors are hoping the bank will announce a major step to alleviate the debt crisis in the eurozone.
Meanwhile, the FT reports that the EU is considering a merger of its two bailout funds. That could prove to be a good move for the EU as it would give it greater flexibility and strength.
The euro has been in a downward trend since the beginning of the year. It has recovered some of its lost ground after US non-farm payrolls data was released last Friday. However, the euro remains under pressure due to deteriorating economic conditions in the European Union. The Fed’s recent hawkish remarks weigh on the currency.