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EURUSD forecast for 15.05.2020

May 15, 2020

May 15, 2020

Euro enjoys the calmDmitri Demidenko

The EUR/USD needs a fresh driver

The markets now enjoy calm after the storm. After jumping up and down in the February-March period, the [EUR/USD][1] is slowly moving in the range that becomes narrower. Bulls can’t drive the price above 1.09, bears can’t break through the support at 1.07-1.0775. The pair needs fresh drives to exit the trading range, but there isn’t yet any new driver.

The euro is supported by the US stocks that have stabilized amid a drop in the US jobless claims and a rise in the Chinese industrial production by 3.9% Y-o-Y in April. However, China’s retail sales and investments continue contracting, and Donald Trump, like a naughty child, refuses to talk to Xi Jinping. The US President says he could even cut all the ties with China, and if the US did it, it would save $500 billion. The US- China trade war could still be resumed, and the trade war in 2018-2019 did much harm to the export-led euro area.

Dynamics of China’s industrial production and retail sales

![LiteForex: EURUSD forecast for 15.05.2020][2]

Source: Bloomberg

The euro is waiting for Germany’s GDP report. While Germany is complaining that it will lose €81.5 billion in tax revenues, other euro- area countries criticize Berlin for its unwillingness to spend money. Angela Merkel’s government could receive resources virtually for free, but it didn’t. As a result, Germany has the lowest debt-to-GDP ratio of major euro-area countries. German GDP will be down by just 2.2% Q-o-Q, according to Bloomberg experts. The euro-area GDP will lose 3.8% Q-o-Q. The inequality causes envy and discontent, and the German constitutional court requires explanations from the ECB, which provides aid to poorer countries. The fish rots from the head. So, I won’t be surprised if the currency bloc starts falling apart because of Germany.

Dynamics of debt-to-GDP ratio in euro-area countries

![LiteForex: EURUSD forecast for 15.05.2020][3]

Source: Bloomberg

The euro looks vulnerable. But for the US stock indexes, grabbing every positive news bit, or the factors of the greenback’s weakness in the long-term outlook, the [EUR/USD][1] would be below the support 1.077-1.0775. The US huge public debt and the expansion of the Fed’s balance sheet to $9.63 trillion by December 2021 and to $11.27 trillion by December 2022, according to the forecast of the analysts polled by the Wall Street Journal, make investors worry. Investors now wonder when they will need to sell the dollar.

Remarkably, the median gauge of Bloomberg experts suggests the [EUR/USD][1] should be at 1.12 in late 2020. Yes, the forecast has lowered from 1.15 suggested in January, but the bulls still hope to resume the euro uptrend. In my opinion, this could happen only if the trade war completely ends, the euro area stays united and the global GDP quickly rebounds in the second quarter. All of this is still possible. In the meanwhile, the [EUR/USD][1] is slowly drifting in the trading range of 1.077-1.09.

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Price chart of EURUSD in real time mode

![Euro enjoys the calm][6]

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

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  1. my.liteforex.com/trading/chart?symbol=EURUSD&returnUrl=true
  2. cdn.liteforex.com/cache/uploads/blog_post/eurusd/china-indicators-15-05-20.jpg?w=30&s=0b61b8842ff9a531132e83306082e42a
  3. cdn.liteforex.com/cache/uploads/blog_post/eurusd/debt-euro-area-15-05-20.jpg?w=30&s=4d92da9dfc22112a3124568b79aeb49b
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  6. cdn.liteforex.com/cache/uploads/blog_post/eurusd/liteforex-blog-eurusd-15-05-20.jpg?q=75&w=1000&s=21244a592112ae03a9142e9cc367edbe