Monthly Forecast : #EURUSD & #USDMXN (April 2024)

EUR/USD Monthly Forecast: April 2024

The EUR/USD will begin April’s trading near mid-term lows as financial institutions continue to show nervous behavioral sentiment regarding the outlook of U.S Federal Reserve policy.

• The EUR/USD went into this weekend near the 1.07895 level which will not make bullish traders happy, unless of course they believe current price levels are near durable support.
• However, traders who have had bullish perspectives and have looked for higher momentum to ignite in the currency pair solely based on technical support levels in March are likely feeling a bit unsatisfied as prices have continued to test lower realms.
• The ability of the EUR/USD to continue trading lower mirrors the broad Forex market, but the downward trend of the Euro is noteworthy.

There is a growing concern in some financial institutions the European Central Bank may be forced to cut interest rates before the Federal Reserve. U.S data continues to come in stronger than anticipated. GDP numbers and inflation statistics last week in the U.S continued to show a rather stubbornly strong economy; even Consumer Sentiment numbers were higher than anticipated. While the Fed has seemingly promised a few interest rate cuts in 2024, economic data is not helping its case and doubts are being seen throughout global Forex as the USD has gotten stronger.

Holiday Trading and an Early Test of Sentiment

While the EUR/USD went into the weekend touching values seen in late February, the currency pair is also once again bouncing up against mid-December values before the U.S Federal Reserve made its ‘official’ rhetoric softer. Choppy conditions have been stark in the EUR/USD since the middle of December and in March a high of nearly 1.09835 was seen on the 5th briefly. Yet, the overwhelming response to moves higher in the EUR/USD over the past few months and weeks have been reversals lower.

More volatility will develop later this week in the EUR/USD. Trading volumes to start April will be light as financial institutions return from the Easter holiday, but this coming Friday crucial jobs data will come from the U.S and speculators will react. The Fed has been put into a position that seems to be wishing on weaker jobs numbers in order to talk about interest rate cuts. Jerome Powell said recently that even if inflation remains sticky in the mid-term that weaker hiring could spur the U.S central bank into a rate cut. However, economic data from Europe has been weaker than U.S statistics and this has created the notion the ECB could be forced into a position in which they are more dovish than the Federal Reserve.

The 1.08000 Ratio as a Barometer for the EUR/USD

• Trading going into the holiday weekend was light and its results may lead to volatile reactions early this week.
• Intriguingly Gold remains near record values even as the USD is at stronger levels, which is suspicious and suggests Forex has additional volatile days ahead.

Traders who are convinced the EUR/USD has been oversold should be careful. The 1.08000 ratio is likely important for behavioral sentiment. Unless the 1.0800 level is penetrated upwards and sustained, traders may believe selling power continues to remain dominant in the EUR/USD.

EUR/USD Outlook for April 2024:

Speculative price range for EUR/USD is 1.07425 to 1.09150

The choppy trading conditions which have plagued Forex are likely to continue until clarity regarding central bank outlooks start to become better. Jobs numbers this Friday from the U.S will take on added significance and have an effect on the EUR/USD which is likely to create a rather wide price range being demonstrated. Quick hitting trades should be done with proper risk management, and for traders holding positions before the jobs data the use of stop loss and take profit orders will help.

April may prove to be difficult for traders if U.S data continue to come in mixed. But if jobs numbers this coming Friday proves weaker than anticipated this could lead to some bullish ignition in the EUR/USD based on the notion the Fed will have ammunition to pursue a rate cut in June. But if the EUR/USD were to fall below the 1.07600 level this would be a bearish signal and likely be acknowledging U.S data continues to be stronger than anticipated and the ECB may have to actually be the first to cut interest rates.

USD/MXN Monthly Forecast: April 2024

Continued US dollar decline vs. Mexican peso. Crucial levels at 16 and 17.50 pesos. Interest rate differentials and US-Mexico economic ties key factors.

• The US dollar has continued to drop against the Mexican peso during the month of March, which is truly interesting considering we have just made a “lower low”, on the weekly chart.
• That being said I still see a lot of noise between here and 16 pesos that we need to watch out for, so the month of April could be one that is going to be crucial as to where this pair goes for the longer-term.

The US dollar has been struggling for some time against the Mexican peso, mainly due to the interest rate differential. After all, in this world we like to get a lot of interest whenever we can, and the fact that the central bank in Mexico offers 11.25%, makes the Mexican peso a currency that a lot of people will be interested in. However, that doesn’t mean that we get a straight shot down.

Pay attention to America

Ironically, if the economy in the United States starts to crumble, that can actually work against the value of the Mexican peso, despite the fact that the interest rate differential will be massive. After all, most of Mexico’s economy involves the United States one way or another, as Mexico is now the largest exporter to the US. Furthermore, it’s probably worth noting that the pair also has to deal with remittances, which is just another way to talk about Mexicans sending money home that are presently working in the United States.

At this point, rallies are probably selling opportunities with the 50-Week EMA near the 17.50 pesos level, but if we were to break down below the 16.00 pesos level, I think we could see a huge flush in the US dollar, perhaps sending it much lower. If that’s the case, it means that there will probably be a major “risk on” attitude around the world, and it does make a certain amount of sense that we could see that happen with the Federal Reserve looking to cut rates this year. However, you should also be aware of the fact that the Mexican peso is considered to be an emerging market currency, meaning that traders won’t want to hold it if we are in a sudden “risk off” type of attitude.

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