2020-08-31 • Updated
EUR/USD is climbing up. The move above 1.1950 will drive it to 1.2000. Let’s find out the main reasons why it may happen.
Have you noticed that the US dollar is traded at its lowest levels for almost two years? Indeed, most analysts have bearish forecasts on the greenback. According to Bloomberg, the USD is likely to be the weakest among such currencies as the JPY, the CHF, and the EUR even when the coronavirus passes. On Thursday the Fed made a dovish statement, which undermined the already fragile US dollar. Going a bit further, US officials claimed that they would allow the inflation and unemployment to run higher, which in turn will leave interest rates at low levels for years to come. As a result, that announcement has forced investors to sell off the low-yielding dollar.
According to ING, the main driver of EUR/USD will remain the dollar weakness for quarters to come. They emphasized that positive European news has never influenced the pair so significantly as the performance of the greenback.
Here’s what chief FX strategist thinks about the most traded pair: “EUR/USD keeps knock knock knockin’ on 1.20s door but has so far failed in every attempt before getting too close. It is probably just a matter of time before it happens, but the ECB will have a clear interest in fighting it short-to-medium-term since the European inflation is yet way too fragile”.
September 1 will be full of PMI releases from both sides of the Atlantic. The European PMIs will start to come out at 10:15 MT time and last till 11:00 MT time. Later on, the US PMI will be released at 17:00 MT time. Follow the reports and catch market flows! As a rule, if PMI is better than the forecasts, the currency will rise. Otherwise – fall.
Let’s have a look at the 4-hour chart. The pair has been trading in a range between 1.1770 and 1.1850 for a while. However, it has managed to escape it, breaking through two support levels at 1.1850 and 1.1900. The move above the high of August 19 at 1.1950 will clear the way towards the key psychological mark of 1.2000. Follow further Forex news!
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