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EURUSD forecast for 22.06.2020

June 22, 2020

June 22, 2020

Euro is to play a new cardDmitri Demidenko

Concerns about changes in the EU fiscal stimulus and the requirements

of the German court don’t discourage the EUR/USD bulls

The euro area can wait, but will the euro wait? According to Dutch Prime Minister Mark Rutte, the EU may need more time to agree on the fiscal stimulus. At the EU June summit, the European governments decided to reach a deal on the huge fiscal stimulus before the end of July. The four countries, which oppose the €750 billion aid package proposed by the European Commission and the additional budget of €1.1 trillion to help the EU recover from the coronavirus pandemic, and the supporters of the French-German plan may need one or two additional rounds of talks to find a compromise. The euro will hardly go stronger amid the uncertainty that emerged.

The majority of the EU member states and the so-called “Frugal Four”, the Netherlands, Sweden, Denmark, and Austria, cannot reach an agreement on the matters of the program scope, the share of grants and loans in its structure, how quickly money should be received and returned, and whether it is worth introducing new taxes or raising old ones to pay off arising debts. There were strong disputes among the EU governments, however, the relations have improved recently. The risks of the conflict escalation were pressing the [EUR/USD][1] down over 4 out of 5 past Forex trading days. Bulls were concerned about the corrections in the financial aid package, and even if the worst has been avoided, the uncertainty emerged is a negative factor for the euro.

The euro will be in the spotlight in the week through June 26. Investors expect Markit PMI report and the Ifo Business Climate indicator for Germany, as well as the publication of the last ECB meeting’s minutes. It is expected that Christine Lagarde and her colleagues will demonstrate maximum transparency regarding the conditions and effectiveness of the emergency asset purchase program, which, as you remember, was increased by €600 billion. The transparency, according to the new member of the German Constitutional Court Astrid Wallrabenstein, is necessary for the ECB to fulfill the request made by Germany’s highest court to justify the QE. Before the change, there was a slight majority of Eurosceptics in the court. The situation may change for the better now. The better for the euro.

In my opinion, the euro bulls should now play the factor of a faster rebound of the European GDP compared to the US growth. The economic surprise index is the lowest in the euro area among the G-10 countries. The indicator may now start rising, which should support the [EUR/USD][1] growth.

Economic surprise indices

![LiteForex: EURUSD forecast for 22.06.2020][2]

Source: Nordea Markets

If the reports on the euro-area PMI and the German Business Climate are positive, one could again buy the euro on the breakout of the resistance at $1.1245-$1.125, or on the rebound from the supports at $1.1155 and $1.1125. Unless, of course, the US stock market doesn’t drop. The US stock market has followed the news about the coronavirus pandemic lately. With this regard, the second-highest number of confirmed coronavirus cases in the US suggests selling the S&P 500, while the improved epidemiological situation in China and the lower death rate in the US encourages traders to buy.

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Price chart of EURUSD in real time mode

![Euro is to play a new card][5]

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/index-surprise-22-06-20.jpg?w=30&s=885a70236784e7aa7a6e3e65ce0d7c96
  3. my.liteforex.com/?category=analysts-opinions&slug=euro-is-to-play-a-new-card&openPopup=%2Fregistration%2Fpopup&utm_source=blog&utm_medium=article&utm_campaign=bonus
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  5. cdn.liteforex.com/cache/uploads/blog_post/eurusd/liteforex-blog-eurusd-22-06-20.jpg?q=75&w=1000&s=86c60c21e9de9f615a3ecf7759b8eab8