EUR/USD bulls in charge of the action – a break of 1.1500 ahead?
Source: Economic Events 17 July 2020 - Admiral Markets' Forex Calendar
The Euro pushed to its highest levels against the US dollar since March, falling short of only around 50 pips short to attack its current yearly highs of 1.1495/1500. The driver for this bullish performance certainly came from the anticipation of further fiscal integration.
While Dutch Prime Minister Rutte said last Tuesday that he was pessimistic about the chances of reaching a deal at the special summit of EU leaders starting today, it nevertheless appears that EU leaders are committed to moving towards finding an agreement on a roughly 1.85 trillion Euro European Corona pandemic recovery fund.
This can also be seen in the comments from the ECB, and rhetoric from ECB president Lagarde last Thursday, were she re-formulated the monetary policy status quo after the ECB exceeded expectations at its last policy meeting by increasing the size of its pandemic emergency purchase program (PEPP) to 1.35 trillion Euro, and extending its run at least through June 2021.
That said, we expect further bullishness in the Euro, especially against the US dollar, in the coming days, with a break above 1.1450/1500 arriving sooner rather than later, levelling the path up to 1.1700/1800.
Still, this bullish outlook should be taken with a grain of salt since technically the bearish divergence in the RSI(14) on a Daily time-frame to, at least short-term, diminishing bullish momentum.
Nevertheless, as long as EUR/USD trades above 1.1150/1200, our bullish stance on the Euro against the US dollar stands:
Source: Admiral Markets MT5 with MT5-SE Add-on EUR/USD Daily chart (between May 17, 2019, to July 16, 2020). Accessed: July 16, 2020, at 10:00pm GMT - Please note: Past performance is not a reliable indicator of future results, or future performance.
In 2015, the value of the EUR/USD fell by 10.2%, in 2016, it fell by 3.2%, in 2017, it increased by 13.92%, 2018, it fell by 4.4%, 2019, it fell by 2.2%, meaning that after five years, it was down by 7.3%
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