Logo

Posts

EURUSD forecast for 18.05.2020

May 18, 2020

May 18, 2020

Dollar changed the shoesDmitri Demidenko

The White House changed its attitude to the U.S. currency

You could do anything to win the presidential elections! You could also abruptly reverse your own point of view. For most of his presidential term, Donald Trump was a fan of a weak dollar. In May, however, he supports the position of the former U.S. administrations that the strong currency is necessary. And the current US President has his reasons. Amid the huge fiscal stimulus, the focus is switched from foreign trade and competitiveness to the sources of managing the growing budget deficit. Besides, the strong greenback currently seems to be an advantage, as the strong currency indicates the US strong economy.

Donald Trump needs to find the subtle balance line between the US stock indexes and the US dollar, which are moving in opposite directions as investors are very responsive to the risk. Trump always saw the S&P 500 be an indicator of his success as the President. Also, the US stock market crash in March substantially lowered Trump’s chance to win the upcoming presidential election.

Dynamics of the S &P 500 and the popularity of Democrats and Republicans 

![LiteForex: EURUSD forecast for 18.05.2020][1]

Source: Bloomberg

Therefore, it is not surprising that the worst drop in the US industrial production (-11.2%) and retail sales (-16.4%) since the government began tracking in 1911 and 1992 respectively, is presented as a bottom of indicators’ fall. They say it can’t be worse than in April. Yes, retail sales account for about 42% of the US consumer spending or 70% of the GDP, and the indicator’s drop by 23% over two months has subtracted, according to the ING, more than 6 basis points from the nominal gross domestic product. But the worst is already over, isn’t it?

One should understand Jerome Powell’s words that it doesn’t make sense to bet against the US economy, and the Fed hasn’t yet run out of the monetary tools. According to the FOMC president, the current recession is not that deep as the Great Depression, though the pre-crisis conditions will hardly be restored until 2021. Such a tone of the Fed’s president and the interpretation of the US domestic data support the S&P 500.

The major growth driver for the US dollar is the talks about the escalation of the US-China trade war. I must admit that the White House successfully fuels the conflict that seemed to be easing. Another portion of the gas in the fire of the trade dispute was poured by the tougher licensing requirements for the companies working with Huawei. __

The euro, on the contrary, has many problems pressing it down. After the report on Germany’s GDP for the first quarter, the split among the euro- area members continues growing.

GDPs of the euro-area countries

![LiteForex: EURUSD forecast for 18.05.2020][2]

Source: Bloomberg.

Germany’s GDP is better than that of most European states, also because Germany introduced the measure limiting the economic activity later (on March 23) than other European countries, and the production sector was hit by the crisis less than the services and tourism sectors. Under the current conditions, the [EUR/USD][3] pair is more likely to break through the bottom of the trading range 1.077-1.09 than the top.

P.S. Did you like my article? Share it in social networks: it will be the best “thank you” :)

Ask me questions and comment below. I’ll be glad to answer your questions and give necessary explanations.

Useful links:

  • I recommend trying to trade with a reliable broker [here][4]. The system allows you to trade by yourself or copy successful traders from all across the globe.
  • Use my promo-code BLOG for getting deposit bonus 50% on LiteForex platform. Just enter this code in the appropriate field while [depositing][5] your trading account.
  • Telegram channel with high-quality analytics, Forex reviews, training articles, and other useful things for traders

Price chart of EURUSD in real time mode

![Dollar changed the shoes][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.

Rate this article:

{{value}}

( {{count}} {{title}} )

  1. cdn.liteforex.com/cache/uploads/blog_post/eurusd/spx-trump-18-05-20.jpg?w=30&s=1b148b7c140355eeda72b8e47e25d8fd
  2. cdn.liteforex.com/cache/uploads/blog_post/eurusd/economic-euro-area-18-05-20.jpg?w=30&s=e5decf62654b423bec2458f8d3c08e54
  3. my.liteforex.com/trading/chart?symbol=EURUSD&returnUrl=true
  4. my.liteforex.com/?category=analysts-opinions&slug=dollar-changed-the-shoes&openPopup=%2Fregistration%2Fpopup&utm_source=blog&utm_medium=article&utm_campaign=bonus
  5. my.liteforex.com/deposit/?category=analysts-opinions&slug=dollar-changed-the-shoes&promo_code=BLOG&utm_source=blog&utm_medium=article&utm_campaign=bonus
  6. cdn.liteforex.com/cache/uploads/blog_post/eurusd/liteforex-blog-eurusd-18-05-20.jpg?q=75&w=1000&s=d82fc610bd5d2ef05da1c6113b5ae003