The Fed plays into the hands of Euro bulls – EUR/USD yearly highs in focus

Juni 12, 2020 12:00

Source: Economic Events June 12, 2020 - Admiral Markets' Forex Calendar

The Euro continued with its bullish performance over the last days, making back all of its 'losses' after last week's NFP report.

The main reason seems to be that market participants realized more and more that the NFP report was very likely a 'fake' report with the BLS stating that […]there was also a large number of workers who were classified as employed but absent from work.[…] and that […]if the workers who were recorded as employed but absent from work due to "other reasons" (…), the overall unemployment rate would have been about 3 percentage points higher than reported[…]

And after the Fed last Wednesday reinforced her dovish stance with the dot plot stating that it sees no rate hikes till the end of 2022, the combination of the EU commission's proposal of a 750 Billion-Euro fiscal stimulus package and the ECB's boost of its PEPP program to 1.35 trillion Euros last week on Thursday, started to play out again.

As a result, a further reduction of the US-EU-yield differential should be expected with the EUR/USD, as we currently focus on the region around 1.1400/50 USD on the upside.

A break higher makes further gains as high as 1.1700/1800 possible, nevertheless, EUR/USD traders should get a little careful due to the technical extended mode which reduces the short-term risk-reward-ratio to a more unattractive level:

Source: Admiral Markets MT5 with MT5-SE Add-on EUR/USD Daily chart (between April 12, 2019, to June 11, 2020). Accessed: June 11, 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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