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EURUSD forecast for 15.06.2020

June 15, 2020

June 15, 2020

Dollar chooses the lineDmitri Demidenko

The EUR/USD trend will depend on the epidemiological situation and

the shape of the US economy’s rebound

Is the dollar sell-off in the second quarter the beginning of the end, or it is too early to give up on the greenback yet? What is the crash of the US stock indexes at the end of the second week of June? IS it the first sign of a deep drawdown? Or, is it just the reaction of the market to the bad news on the epidemiological situation, whose improvement will again encourage the S&P 500 buyers? The answers to these questions will determine much, if not everything. Taking into account the share of the dollar in the Forex operations and the importance of the US stock indexes for the global economy the increased demand for the greenback and the US stocks is natural.

Dynamics of the USD

![LiteForex: EURUSD forecast for 15.06.2020][1]

Source: Bloomberg

Unlike short-term traders, who are selling the dollar off, long-term investors are not willing to get rid of the greenback. There is a risk of the second wave of COVID-19, and the US economy could be recovering slower than it might be expected considering the S&P 500 rally. There is also a risk of the trade wars escalation and the downgrading of credit ratings amid the growth of the government debts. That is why investors hold safe havens in their portfolios. Due to the Fed’s grim forecasts, 10-year Treasury yield failed to go back to the psychologically important value of 1%, and the greenback got stronger at the end of the second week of June.

The White House has the opposite opinion, suggesting a V-shaped rebound of the US economy. The US administration the Republican-controlled Senate oppose extending the extra $600 weekly jobless payments after July. They do not want to discourage people from going back to work. I must note that the White House is supported by some analysts. For example, Morgan Stanley believes the US economy should be back to the pre-crisis levels in late 2020 already.

Investors expect a clue on the shape of the US GDP recovery. According to Bloomberg forecasts, the US retail sales in May should be 7.9% up, covering 40% of losses featured in April. Besides, Facteus weekly report signals the indicator should continue growing in June. The domestic data of China, the country that was the first to defeat COVID-19, show that the Chinese economy is growing at a slower pace than it did before.

Dynamics of China’s retail sales and industrial output

![LiteForex: EURUSD forecast for 15.06.2020][2]

Source: Bloomberg

Financial markets now need an improved epidemiological situation and a strong stimulus. The locomotive of the world’s economy can now become not the US but the euro-area, where the number of new virus cases is rapidly declining. Besides, the cheap money provided by the ECB and the EU governments will encourage the [EUR/ USD][3] bulls. According to Refinitiv, since mid-May, when the French-German fiscal stimulus plan was presented, the demand for the euro options with strikes of 1.15-117 and 1.2 in 1-3 months and 6-12 months has sharply increased. Over the past three weeks, the amount of call options has been 50% more than that of put options, which signals the market bullish sentiment.

In my opinion, the [EUR/ USD][3] could continue the rally if the bulls hold the price above the support at 1.122-1.124. If the support is broken out downside, the price may be corrected down to 1.1155 and 1.112.

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Price chart of EURUSD in real time mode

![Dollar chooses the line][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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