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#1 15-10-2020 16:19:12

johnedward
Admin & Trader
From: Paris - France
Registered: 21-12-2009
Posts: 2910
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EUR/USD: no relief for the euro

EUR/USD: no relief for the euro


The EUR/USD has returned to 1.1700 levels against the backdrop of tensions in the EU. Harsh curfew measures, particularly in France, could jeopardise the economic recovery in the short term. Traders are abandoning the euro in favour of the USD as a safe haven. At the same time, European indices plunged by nearly 3% at mid-session.

Positive catalysts are missing the boat. The fiscal stimulus plan in the United States is not a sure thing, with deep disagreement between Democrats and Republicans, as Treasury Secretary Mnuchin indicates. This is what the market has been waiting for for weeks, while the health situation is tightening in France and around the world.

The heavier health restriction measures in Europe are clearly worrying the sectors most affected by the first wave in Q1. This concern is all the more fuelled by the suspension of research for the virus vaccine by two American pharmaceutical groups. With no vaccine, no progress, and contamination resuming, traders are regaining the optimism that had previously driven the markets.

Economic growth prospects in Germany have been revised downwards for 2021, prompting the decline of the single currency. The corporate publications unveiled so far do not provide a clearer picture of what lies ahead, as they are mainly focused on US banks. The next few days will allow the optimism/pessimism cursor to be adjusted.

The euro is retreating against the US dollar but also against other currencies such as the yen, being considered as a refuge. The euro/Yen is quoted at 123.31 versus 124.9 a few days ago. The euro versus Swiss franc is flirting with 1.0700, a level that had not been seen since summer.

MEDIUM-TERM FORECAST
In view of the key items we have mentioned, our opinion is negative over the medium term on the pair.

Our entry point is $1.1706. Our target price for our bearish scenario is $1.1614. To preserve the capital employed, we advise you to position a protective stop at $1.1759.

The expected return on this Forex strategy is 92 pips and the risk of loss is 53 pips.

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