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EUR/USD about to trigger long against 1.1200, could we see 1.1400 or higher?

June 19, 2020 09:30

Source: Economic Events June 19, 2020 - Admiral Markets' Forex Calendar

The Euro lost some of its bullish momentum in the recent days, failing to break above 1.1400.

Still, the mode remains bullish, and we consider the short-term downard corrective move to 1.1150/1200 to be an attractive region from a risk-reward perspective, and anticipates a break above 1.1400/50.

Several Fed members may speak as we approach the weekly close, but the focus will primarily be on Powell's speech at 5pm GMT. Nevertheless, it seems unlikely for Powell to say something which deviates from Tuesday's testimony in front of the US congress.

While his speech should be quite neutral, one could certainly assume that the current ultra-dovish mode from the Fed will likely continue for a while, especially if we see heavier selling pressure in US equities.

That in mind, it leads us come to the conclusion that, while monetary and fiscal stimulus in the eurozone should result in European yields to rise, US yields should be expected to drop, making the yield differential between European and US yields narrow further, favouring gains in the EUR/USD.

A break above 1.1400/50 leaves the EUR/USD bullish potential up to the region around 1.1700/1.1800, while a drop below 1.1200 could trigger a deeper correction with a target around 1.1000:

Source: Admiral Markets MT5 with MT5-SE Add-on EUR/USD Daily chart (between April 19, 2019, to June 18, 2020). Accessed: June 18, 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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