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#1 30-06-2020 11:51:02

johnedward
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From: Paris - France
Registered: 21-12-2009
Posts: 2831
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EUR: strong demand for the euro continues

EUR: strong demand for the euro continues


Although summer forex trading has already started, the demand for euros hasn't gone anywhere. The European summer months of June, July and August are usually responsible for a drop in volatility and activity in the forex.

This time, things are different, as the virus situation is affecting travel agent, resulting in fewer people taking holidays. As many as twelve of the thirteen euro crosses had positive returns in the foreign exchange market according to a volatility-adjusted analysis. On the other hand, only five of the twenty-seven USD crosses had positive returns.

http://www.forex-central.net/forum/userimages/OvernightForexReturns.jpg


Euro pairs are on an uptrend

In the early days of the virus outbreak, traders increased their exposure to the USD in search of a safe haven. The USD rose on the currency dashboard, having no rivals, despite the fact that the Fed provided massive liquidity to the financial system.

The eurodollar pair was particularly hard hit at the beginning of the virus situation. With two of the largest economies in the euro zone (France and Spain) on alert, the eurodollar fell below $1.08 and struggled to rebound.

The ECB's crisis measures changed the game for the euro and for traders' views. The PEPP and TLTRO programmes have proven their effectiveness in improving financing conditions for European central banks, businesses and retail banks. Moreover, the expected side effects of price stability and economic growth further explain the sudden interest in the euro currency.

What is interesting is that the flight to the euro comes at a time when global USD liquidity is dwindling and the world is preparing for the U.S. presidential election. By selling the USD to buy the EUR, traders are looking to diversify their portfolios ahead of the election data.

1.13 proved to be a strong resistance level for the eurodollar in the first days after Donald Trump's election. Will this resistance continue in this election as well?

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"Anything worth having is worth going for - all the way." - J.R. Ewing

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