Source: Economic Events October 30, 2020 - Admiral Markets' Forex Calendar
When looking at the EVZ, Euro FX VIX, which measures volatility in the Euro FX-Future, recent developments indicate rising volatility in the Euro and, thus, EURUSD.
There has recently been new lockdowns in Europe as a response to the new wave of Coronavirus infections:
- France has imposed new restrictions and a lockdown
- Germany, the biggest European economy, is now also planning a lockdown, even though German Chancellor Merkel calls it a light lockdown, mainly focusing on closing bars and restaurants
Since these new restrictions conflict with the need to revive economies battered by the crisis, the Euro dropped back below 1.1800, most likely due to market participants expecting the ECB to unleash further monetary stimulus at some point in the near future.
- While the ECB didn't implement a looser monetary policy at its meeting on Thursday, the rhetoric of ECB president Lagarde clearly pointed to an increase of the size of the PEPP envelope from €1.35tn to €2.0tn at the December meeting
- This, along with further cuts in the ECB deposit rate by the end of 2021
This would usually, under normal circumstances, result in a very bearish outlook for the Euro against the US-Dollar and explains the drop back below 1.1800. However, the expected US-Dollar weakness that will occur once Democrats and Republicans finally reach a deal on an economic relief package financed with freshly printed US-Dollar from the US central bank FED, will limit the downside in the EURUSD.
While another attack on the region around 1.1600 and even a stint to as low as 1.1450/1500 is in the cards, we are still considering any short-term Euro dip to be short-lived with the currency pair likely to see an aggressive attempt to capture 1.2000 over the course of Q4/2020, especially if a break above 1.1900 is seen:
Source: Admiral Markets MT5 with MT5SE Add-on EURUSD Daily chart (from July 24, 2019, to October 29, 2020). Accessed: October 29, 2020, at 10:00 PM GMT. Please note: Past performance is not a reliable indicator of future results, or future performance.
In 2015, the value of the EURUSD fell by 10.2%, in 2016, it fell by 3.2%, in 2017, it increased by 13.92%, in 2018, it fell by 4.4%, and in 2019, it fell by 2.2%, meaning that in five years, it was down by 7.3%.
Discover the world's #1 multi-asset platform
Admiral Markets offers professional traders the ability to trade with MetaTrader 5, allowing you to experience trading at a significantly higher, more rewarding level than with MetaTrader 4. Experience benefits such as the addition of the Market Heat Map, so you can compare various currency pairs to see which ones might be lucrative investments, access real-time trading data, and so much more. Click the banner below to start your FREE download of MT5!
Disclaimer: The given data provides additional information regarding all analysis, estimates, prognosis, forecasts or other similar assessments or information (hereinafter "Analysis") published on the website of Admiral Markets. Before making any investment decisions please pay close attention to the following:
- This is a marketing communication. The analysis is published for informative purposes only and is in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
- Any investment decision is made by each client alone whereas Admiral Markets shall not be responsible for any loss or damage arising from any such decision, whether or not based on the Analysis.
- Each of the Analysis is prepared by an independent analyst (Jens Klatt, Professional Trader and Analyst, hereinafter "Author") based on the Author's personal estimations.
- To ensure that the interests of the clients would be protected and objectivity of the Analysis would not be damaged Admiral Markets has established relevant internal procedures for prevention and management of conflicts of interest.
- Whilst every reasonable effort is taken to ensure that all sources of the Analysis are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admiral Markets does not guarantee the accuracy or completeness of any information contained within the Analysis. The presented figures that refer to any past performance is not a reliable indicator of future results.
- The contents of the Analysis should not be construed as an express or implied promise, guarantee or implication by Admiral Markets that the client shall profit from the strategies therein or that losses in connection therewith may or shall be limited.
- Any kind of previous or modeled performance of financial instruments indicated within the Publication should not be construed as an express or implied promise, guarantee or implication by Admiral Markets for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.
- The projections included in the Analysis may be subject to additional fees, taxes or other charges, depending on the subject of the Publication. The price list applicable to the services provided by Admiral Markets is publicly available from the website of Admiral Markets.
- Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, you should make sure that you understand all the risks.