EUR / USD forecast: May 2021
Ultimately, it should be a positive month.
April has been a very strong month for the Euro, and I think we will continue to see some pursuit going forward. After all, we have crossed a relatively large bearish trendline and we also have the FOMC meeting and statement on the sidelines. It looks like Jerome Powell is still going to keep the tap on liquidity measures open, and that should continue to work against the value of the greenback. If this is the case, then the euro, by extension, should get a little boost due to the fact that it is quite often seen as “the anti-dollar”.
The fact that we are starting to see signs of life in the European Union again, as the lockdown begins to slow down a bit, pushes this potentially higher pair even further. In addition, bond yields in the EU are starting to rise, so the interest rate differential may tighten a bit. If this continues to be the case, it makes sense for this pair to increase. Add to that the fact that the United States is flooding the market with liquidity, we should see that market rise.
I believe the initial target would be the 1.22 grip, and then we would probably go to the 1.23 level. For this reason, I think short term withdrawals will be buying opportunities, as it quickly becomes a “buy on dips” type situation. I think the 1.20 handle below should be supported, assuming we drop back below the trendline I marked on the chart.
The only thing worth paying attention to is the fact that we are a little too stressed as the month approaches, but it is evident that the whole attitude of the market has changed and the US dollar is starting to show signs. of weakness. not only here, but in several pairs around the world. For this reason, I think the month should be relatively straightforward, but keep in mind that the Euro likes to be very volatile as it is the realm of high frequency traders these days. Ultimately, it should be a positive month.