Start the week of July 10, 2022 with our Forex forecast focusing on major currency pairs here.
The euro had a horrible week, as we have sliced through major support in the form of the 1.04 handle. That being said, the market is now extremely oversold so I would anticipate that the beginning of the week might be more about recovery than anything else. However, that recovery should end up being a nice opportunity to start shorting the market again, as the euro looks all but predetermined to reach the parity level sometime this summer.
It’s worth noting that I figured parity would be hit sometime in August, but it would not be surprising at all to see it happen this week. The parity level will attract a lot of attention, so I would anticipate a short-term bounce in that general vicinity.
The British pound had a choppy week, breaking down below the 1.20 level at one point before recovering. In this general area, I would expect to see a lot of noisy behavior, but I still favor fading short-term rallies that show signs of exhaustion. After all, the US dollar is like a wrecking ball against almost everything else, so the British pound won’t be any different. With that being the case, I do think that eventually we will look to reach the 1.15 level, but this particular week might be noisy.
The US dollar rose against the Canadian dollar but still struggles with the idea of breaking above the 1.31 level. At this point, it’s an obvious area of significant resistance. If we were to break above the 1.31 level, I think we have a real shot at seeing a major breakout. This week will probably be more about chopping away at that potential barrier than anything else. I would anticipate that oil will have a lot to say as to where we go as well, as the usual correlation between the Canadian dollar and crude oil should continue.
The US dollar rallied significantly against the Japanese yen during the trading week, but could not break out above the selling area from the past two weeks. That being said, the previous two candlesticks were shooting stars, so the fact that we are pressuring to the upside still shows just how much resiliency there is in this move. Buying on the dip should continue to be the best way to play this market, this week and beyond.