EURUSD Price Chart

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Basic Euro Forecast: Bearish

  • International locations throughout Europe are reporting a resurgence in Covid-19 infections after a quick lull, though that could possibly be due merely to elevated testing.
  • If confirmed, the European financial system might not outperform the US in the best way beforehand anticipated, and that might harm EUR/USD, significantly if pessimism concerning the EU financial system prompts skilled merchants to cut back their lengthy positions additional.

Euro value susceptible to setback

A second wave of the Covid-19 pandemic seems to be hitting Europe, forcing traders to rethink the narrative that the European financial system will undergo much less harm from the virus than the US financial system. Whereas the most recent rise in an infection numbers could possibly be due merely to elevated testing, the concern is that it’ll immediate additional damaging lockdowns.

That could be a clear destructive for EUR/USD and could possibly be magnified if extra traders determine to reply by lowering additional their lengthy positions within the pair. Because the chart under reveals, professionals have been lengthy EUR/USD since March however have been lowering their lengthy positions in current weeks.

EURUSD Chart

Supply: CFTC CoT Report(You possibly can click on on it for a bigger picture)

If that development persists, EUR/USD might nicely dip to the lows at 1.1611 and 1.1613 recorded on September 25 and September 28, and maybe just under there to 1.16 or 1.1596, the place the 100-day shifting common checks in.

EUR/USD Worth Chart, Every day Timeframe (July 15 – October 15, 2020)

EURUSD Price Chart

Supply: Refinitiv (You possibly can click on on it for a bigger picture)

EUR Forecast

EUR Forecast

Advisable by Martin Essex, MSTA

Obtain our recent Q4Euro forecast

Confidence knowledge on the agenda

The complete impression on the Eurozone financial system of the Covid-19 pandemic within the three months July-September won’t be recognized till October 30, when “flash” preliminary third-quarter GDP knowledge are launched. This coming week, nonetheless, is a vital one for confidence indicators suggesting the extent to which sentiment has been broken by the prospect of a second wave.

German and Eurozone shopper confidence numbers, and French enterprise confidence knowledge, are all launched Thursday. The subsequent day they are going to be adopted by flash October buying managers’ indexes, and any indicators of worse-than-expected weak spot might make the outlook for EUR/USD much more bearish.

Begins in:

Dwell now:

Oct 20

( 10:10 GMT )

Advisable by Martin Essex, MSTA

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— Written by Martin Essex, Analyst

Be happy to contact me on Twitter @MartinSEssex