Will the euro reach pre-COVID levels and become even weaker in the future?

EUR / USD analysis

  • Dove The ECB is working on COVID-19 hesitation and higher inflation.
  • Growth prospects have been constrained.
  • that is U.S. dollar Has the rally just started?
  • There is room for bearish growth.

The basic retreat of the euro

EUR Regions facing growing challenges

European Central Bank (ECB) So far, it’s the most adaptable of the majors Central Bank And now, with the recent spread of COVID-19 throughout the euro region, their work has become complicated.Permanent high inflation It continues to plague the region and is unlikely to soften at the expected low temperatures (higher energy demand) in winter.Virus spread is expected to exacerbate the problem in relation to the slower economic growth, Causes the stagflation debate again. Simply put, rate hikes can help slow inflationary pressures, but at the expense of higher borrowing costs, they put more pressure on households and businesses and limit economic growth.

Another headwind the euro is facing is The Pandemic Emergency Purchase Program (PEPP), scheduled to end in March 2022, is designed to be immune to viruses that do not signal the economy in the event of a worsening situation.

Germany’s Ifo Business Climate (NOV) release and GfK Consumer Confidence (DEC) act as a barometer for the euro area, and the lack of both events makes market participants’ outlook sick.

German Economic Calendar:

GfK Consumer Confidence

sauce: DailyFX Economic Calendar

Later today (See the calendar below), ECB minutes will be announced from the November meeting. Investors scrutinize details about asset purchases and rate hikes.

ECB Minutes

sauce: DailyFX Economic Calendar

Is the dollar rally declining?

This week was all about U.S. dollar The market is pushing the greenback by focusing on selected economic data. Yesterday, the printing of the first unemployed complaint masked the lack of other data, FOMC The minutes are from the Fed QE Taper if necessary. Although the minutes were a little late, the dollar rose in the post-release market and the message was received. However, the dollar fell this morning as the market may have been vibrant following yesterday’s announcement. The ambitious dollar bullish may be disappointing in the short term, as there may be minor corrections, but the basic situation in Europe for the United States is clearly different. Keteris Palibs, Difference from EUR U.S. dollar Fundamentals should look at the long-term benefits of the greenback against the euro.Euro is approximate this year alone 8.3% Lower the dollar to 3rd The worst performing G10 currency.

FX rate and USDYTD

Source: Reuters

NS U.S. dollar Got more evidence in EUR After the re-election of Federal Reserve Chairman Jerome Powell yesterday. The market called Powell “HawkishBut in reality he is far from Taka. I think the dollar’s rise will recover in the short term. Later today, US PMI data (see calendar above) regained momentum, EUR / USD Bear – Depends on the data.

EUR / USD technical analysis

EUR / USD Weekly Chart:

EUR / USD Weekly Chart

Created chart Warren Benketus, IG

The big picture is EUR / USD Transactions within Triangle formation (symmetry) – A pattern that neither bullish nor bearish. Symmetrical triangles traditionally give the market insight into directional bias when breakouts occur. In this case, below the support of the triangle, it is more reliable at this point. The weekly chart above is also 1.1000 Psychological level.. By the end of the year, it should come as no surprise that this level is taken into account.

EUR / USD Daily Chart:

EUR / USD daily chart

Created chart Warren Benketus, IG

The EUR bull managed to regain some lost ground and found support slightly before swing support. 1.1168 (June 2020).Disadvantage Price action Moved relatively far from 20th EMA (Purple) This may suggest a short-term mean reversion. Current levels may also reflect bear profit taking and may resume the downtrend as more attractive short-term levels become apparent.

NS Relative strength index (RSI) It has been protracted in the oversold area since last week and may add additional support for the fix description above.

Resistance level:

  • 1.1524
  • 20-day EMA (purple)
  • 1.1300

Support level:

  • 1.1168 – June 2020 Support Level
  • 1.1100

IG client emotional data suggests short-term hesitation

IGCS shows that retailers have been working for obviously a long time now EUR / USD, When 72.36% Number of traders currently holding long positions (at the time of writing this article). DailyFX usually disagrees with crowd sentiment, and the fact that traders are net-long suggests a bearish trend, but recent changes in long and short nets tend to be mixed. Is shown.

Contact Warren on Twitter to follow us. @WVenketas

Will the euro reach pre-COVID levels and become even weaker in the future?

Source link Will the euro reach pre-COVID levels and become even weaker in the future?

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