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#1 13-07-2020 17:19:21

johnedward
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From: Paris - France
Registered: 21-12-2009
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EUR/USD: the euro stays afloat thanks to high hopes for a recovery

EUR/USD: the euro stays afloat thanks to high hopes for a recovery


The EUR was trading with narrow margins, cautiously, in the middle of a vast channel against the USD, as major companies' semestrial figures are about to be released, starting with those of major US banks this week. On the other hand, the eurodollar remained stuck, subject to opposing forces: a stronger-than-expected recovery on both sides of the Atlantic on the one hand, and epidemic statistics that are thwarting economic forecasts on the other.

"U.S. banking institutions should see their trading income and loan revenues hold up well as a result of the market rally and increased financial support from the Fed and the government. On the other hand, we will be attentive to the impact of risk provisions, which sharply reduced earnings in Q1," says Vincent Bay, an analyst at IG France.

The virus figures, though, are frightening, particularly in India, Australia, Brazil, Mexico and the United States, where the number of new cases detected now hovers around 59,000 almost daily.

In Friday's statistics, there was a pleasant surprise with French and Italian industrial production, which exploded well above expectations, with +20.1% and +41.9% respectively. From a sectoral point of view, resilience is particularly strong on capital goods, machine tools and transport equipment. On the other side of the Atlantic, the various producer price indices were clearly disappointing, whatever the base. In particular, excluding food and energy (which are considered volatile), last month's producer prices fell at a monthly rate of 0.29%, whereas on average, the economists and analysts questioned saw these "producer prices" rise by 0.09%.

Right now, the EUR/USD is trading at around $1.1368.

MEDIUM-TERM FORECAST
In view of the key chart factors we have mentioned, our opinion is neutral in the medium term on the pair.

We will maintain this neutral view as long as the EURUSD is positioned between support at $1.1109 and resistance at $1.1439.

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