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EURUSD forecast for 26.06.2020

June 26, 2020

June 26, 2020

Euro is not coming down without a fightDmitri Demidenko

EUR/USD bulls are trying to hold the price above level 1.12

The market isn’t reacting to the bad news, which is good news. The number of COVID-19 cases per day in the US has increased to a record high. The U.S. senators seek to sanction Chinese officials for violating Hong Kong’s independence. The report on the US initial jobless claims has been worse than the forecast. All these factors should have dropped the S&P 500 below 3000, the [ EUR/USD][1] should have been down to at least the support at 1.117. The international trade was down by 12.1% in April, which is the worst drop since records started. Reuters experts say the global economic state has deteriorated. To skeptics’ surprise, the US stocks have been up, and the euro-dollar has been held up above figure 12. The euro is not coming down without a fight!

The second wave of the pandemic and the escalation of trade wars are the factors that can trigger a deep correction in the U.S. stock market. On June 24, the S&P 500 was down when the number of coronavirus cases was close to the record high. However, when the number of new COVID-19 cases reached its peak, the U.S. stocks have been unexpectedly up. In fact, COVID-19 is just a decoration and the stock market moves depend on how deep the US GDP drops and how quickly it rebounds. That is why the market was more impressed by the speech of White House chief economic adviser Larry Kudlow, who said that the economy is not going to be closed again, the US economy could expand by 20% in the second half- year, and the US unemployment rate could fall below 10% by the end of 2020, than by the surge in the new coronavirus cases.

Dynamics of new COVID-19 cases in the USA

![LiteForex: EURUSD forecast for 26.06.2020][2]

Source: Financial Times

The fact that the epidemiological situation in the USA doesn’t improve suggests it is not relevant to sell off the US dollar. According to JP Morgan, the greenback could be much weaker than it is now expected if the global GDP is 2% up by the year’s end, and if the projections for the growth-gap between the US and the global economy are 3% down. The first suggestion is not working yet. 71 out of 90 experts polled by Reuters say the global GDP outlook has been worse over the past month or at least has been the same. On the other hand, Bloomberg’s leading indicators signal that the euro-area economy is recovering faster than the U.S. growth.

Dynamics of recovery trends for global economies

![LiteForex: EURUSD forecast for 26.06.2020][3]

Source: Bloomberg

Investors were focused on the ECB reply to the German constitutional court and ignored an important point in the minutes of the Governing Council’s June meeting. If the euro-area GDP is strong, €1.35 trillion of the emergency purchase program won’t be spent. This a clearly hawkish stance, which is surprising at the current stage of economic development.

In my opinion, the[ EUR/USD][1] will hardly rally up unless the epidemiological situation in the U.S. improves. However, a faster recovery trend for the euro area and China than for the USA, suggests bullish market sentiment. Therefore, it makes sense to open long positions if the pair foes down to the supports at 1.1155 and 1.112.

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Price chart of EURUSD in real time mode

![Euro is not coming down without a fight][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/covid-19-usa-26-06-20.jpg?w=30&s=a8eccce02c2e0a8aaa59a529fb60880d
  3. cdn.liteforex.com/cache/uploads/blog_post/eurusd/nike-recovery-26-06-20.jpg?w=30&s=218a9f0d17593de725a5c2ed3bbdcafb
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  6. cdn.liteforex.com/cache/uploads/blog_post/eurusd/liteforex-blog-eurusd-26-06-20.jpg?q=75&w=1000&s=7a51dc2d24c467bf536013035ae57748