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#1 18-11-2020 13:29:21

johnedward
Admin & Trader
From: Paris - France
Registered: 21-12-2009
Posts: 2944
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EUR/USD: the USD drops yet further

EUR/USD: the USD drops yet further


A vaccine? YES! The end of stimulus plans? NO! It is in this logic that the market has been evolving for a few days now, just like the dollar, which remains under pressure. Admittedly considered as a safe haven, traders are now abandoning it, but the performance of indices also seems to underline that a positive intermediate test of a vaccine delivered by 2021 is not enough.

The FED has rightly pointed this out, as the road to economic recovery is still long. The FED's Powell stressed this on Tuesday night, indicating that a fiscal stimulus plan is necessary at the risk that the economy may not be able to recover on its own. The recovery has so far been faster than expected, but now there are slowdowns in the United States. He added that progress in vaccine research does not yet allow for an assessment of the impact on the economic outlook. He therefore put everyone back on their feet and concluded that the tools in place should not be put aside for the time being.

It is in this state of mind that the currency market is evolving with, on the one hand, the decline of the US dollar towards its annual lows, benefiting the euro-dollar, a decline of the yen which does not interest a market in "risk on" mode, and a strengthening of the New Zealand dollar.

Still, no big macroeconomic figures have been released until today (Thursday), the busiest day of the week in terms of statistics.

KEY CHARTS
The euro-dollar remains on a moderate but gradual rise with a strong resistance in approach between 1.1920 and 1.1960. It is the highest of this year and for months it has been playing its role perfectly. Thus a neutral/bullish bias is adopted near this zone without anticipating a reversal because it is against the trend of these last sessions. The potential/risk ratio is clearly not interesting at the moment to place oneself as a buyer in a Swing Trader's logic.

Only the most aggressive will watch from now on the slightest signal of weakness while a daily reversal will only take place at the break of $1.1744.

MEDIUM TERM FORECAST
In view of the key chart factors we have mentioned, our opinion is positive in the medium term on the EUR/USD's exchange rate.

Our entry point is at 1.1800 (yes, it will have to dip below the current price). Our target price for our upward scenario is $1.1965. In order to preserve the capital employed, we advise you to position a protective stop at $1.1745.

The expected return on this strategy is 165 pips and the risk of loss is 55 pips.

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