EURUSD significantly above 1.1600, despite rising US yields – 1,2000 soon?

Oktober 09, 2020 11:30

Source: Economic Events October 09, 2020 - Admiral Markets' Forex Calendar

Into the weekly close, the economic calendar is quite thin, even though recent political developments are delivering enough fuel for potential volatility in FX markets and, thus, EURUSD.

Tuesday evening US President Donald Trump tweeted that he told his administration's negotiators around US Treasury Mnuchin to end their current coronavirus stimulus talks with Democrats until after the US presidential election on the 3rd of November.

Here is what happened, as a result:

  • The US-Dollar saw an initial sharp push higher
  • EURUSD dropped, but the currency pair failed to gain further bearish momentum and stabilized around the short-term important support of 1.1680/1700
  • In less than 24 hours, EURUSD traded slightly below 1.1800 again

This underlines that US-Dollar long engagements should be taken, if at all, very cautiously.

That may be especially true since the US-Dollar hasn't shown any signs of further strength or an acceleration of its recent short squeeze with 10-year US yields pushing to the highest levels since June.

In fact, we consider the implicit USD weakness over recent days as proof of our overall bullish EURUSD take, expecting it to trade around 1.2500 and even higher 6 to 12 months from now.

While we still foresee a stint to below 1.1600 and the currency pair testing the region around a potential mid-term long-trigger around 1.1450/1500, the US-Dollar could see heavier selling pressure, especially if the FED issues a Corona relief package for further monetary stimulus by significantly ballooning its balance sheet beyond the 7 trillion USD, thus, levelling the path back to 1.2000 in the days to come:

Source: Admiral Markets MT5 with MT5SE Add-on EURUSD Daily chart (between July 03, 2019, to October 08, 2020). Accessed: October 08, 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:

  1. This is a marketing communication. The analysis is published for informative purposes only and are 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.
  6. 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.
  7. Any kind of previous or modelled 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.
  8. 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.
  9. 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.
Admirals Eine Komplettlösung für das Bezahlen, Investieren und Verwalten Ihres Geldes

Admirals ist mehr als ein Broker. Wir sind der Dreh-und Angelpunkt für Ihre Finanzen, indem wir Ihnen eine breite Palette von Finanzprodukten und -dienstleistungen anbieten. Wir machen es möglich, persönliche Finanzen durch eine Komplettlösung für das Investieren, Ausgeben und Verwalten von Geld anzugehen.