Logo

Posts

EURUSD forecast for 29.05.2020

May 29, 2020

May 29, 2020

Dollar will pull the plugDmitri Demidenko

US sanctions against China will make capitals flow out from Hong

Kong, which is a kind of gateway to the Chinese stock market

The [EUR/USD][1] bulls have drawn the price above the top of figure 10 encouraged by the EC willingness to issue €750 billion of bonds, and their opponents haven’t been supported even by US weak domestic data. The US GDP drop in the January-March period turned out to be deeper on a quarterly basis (-5%) than it was previously expected (-4.8%). The number of jobless claims over 10 weeks exceeded 40 million. However, the past is in the past. The first quarter is over, the second one is going to be the worst in the US history, however, the third can well be the best. Unless the economic sentiment is down.

The euro is still being spurred by the EC plans to support the euro-area economy, and the bulls use every good news bit to go ahead. The euro- area economic sentiment in May has been a little up from the record low. But this hasn’t discouraged the [EUR/USD][1] bulls. The talks about unity in the euro area continue. Earlier, Germany, the major contributor to the EU budget, strongly opposed the huge fiscal stimulus. Now, everything has changed. Looks like the German government feels guilty for the ruling of the Constitutional court that could blow the euro area apart.

Dynamics of the euro-area economic sentiment

![LiteForex: EURUSD forecast for 29.05.2020][2]

Source: Bloomberg

Payment for the stimulus

![LiteForex: EURUSD forecast for 29.05.2020][3]

Source: Bloomberg

The European Commission will issue bonds, which will be repaid from the EU budget by 2028. Italy and Spain will receive the major benefits, they stand in line with grants and cheap loans worth €313 billion. Earlier, the Southern countries resented that their debt would grow, now, however, they can receive a part of the money for free. Formally, the final decision on the financial aid plan will be taken on the EU summit on June 19. Based on the market reaction, the plan should be easily approved.

Grants and loans in the EU

![LiteForex: EURUSD forecast for 29.05.2020][4]

Source: Bloomberg

The euro could rise even higher if the US stocks didn’t stop growing. The S&P 500 dipped as investors awaited Washington’s response to China tightening control over the city of Hong Kong. Donald Trump said he will hold a press conference concerning this matter on May 29. Hong Kong is a kind of gateway to China for US investors. It provides relatively secure access to the Chinese stock market. Besides, tight fixing of the Hong Kong dollar to the greenback reduces currency risks to a minimum. The capital outflow amid Washington’s potential sanctions may result in a new turmoil in the US stock market.

According to JP Morgan, which advised to buy the S&P 500 in March, investors now should take the profits and exit the purchases of the US stocks. MUFG Bank notes that the hope for the quick rebound of the US economy is still strong, but it will be fading away as investors will be getting more concerned about the US-China trade relations. This will increase the demand for safe havens. In this environment, the [EUR/USD][1] bulls should aim at holding the price above 1.105-1.1065.

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][5]. 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][6] 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 will pull the plug][7]

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. my.liteforex.com/trading/chart?symbol=EURUSD&returnUrl=true
  2. cdn.liteforex.com/cache/uploads/blog_post/eurusd/sentiment-29-05-20.jpg?w=30&s=e32fa6ab66b0ddeae26731a85303aec4
  3. cdn.liteforex.com/cache/uploads/blog_post/eurusd/pays-29-05-20.jpg?w=30&s=fbfe6ec127c0339be79ad079ed46c9a0
  4. cdn.liteforex.com/cache/uploads/blog_post/eurusd/grants-loans-29-05-20.jpg?w=30&s=7dd886e101d1d54c630b4d271f73bd25
  5. my.liteforex.com/?category=analysts-opinions&slug=dollar-will-pull-the-plug&openPopup=%2Fregistration%2Fpopup&utm_source=blog&utm_medium=article&utm_campaign=bonus
  6. my.liteforex.com/deposit/?category=analysts-opinions&slug=dollar-will-pull-the-plug&promo_code=BLOG&utm_source=blog&utm_medium=article&utm_campaign=bonus
  7. cdn.liteforex.com/cache/uploads/blog_post/eurusd/liteforex-blog-eurusd-29-05-20.jpg?q=75&w=1000&s=545a2f1fff8f05c93071a2b0f866e790