EURUSD forecast for 15.07.2020

July 15, 2020

EUR/USD forecast: Euro wants to go upDmitri Demidenko

Fundamental Euro forecast for today

EUR/USD bulls pin their hopes on China’s GDP report, the ECB

meeting, and the EU summit

When the market is full of optimists, it ignores bad news and lively reacts to the good news. It doesn’t matter that during the test of the COVID-19 vaccine, side effects were observed; what matters is that all the people participating in the experiment produced antibodies. It doesn’t matter that corporate reporting by JP Morgan and Citigroup for the second quarter was gloomy, as the actual data exceeded the forecasts. It doesn’t matter that some FOMC members suggest strong uncertainty around the US economic recovery when some US central bankers still believe in the V-shaped recovery trend. When the glass is half- full, the [S&P 500][1] and the [EUR/USD][2] can well continue the rally.

St. Louis Fed President James Bullard says the US economy adapts to the coronavirus, and there is still hope for a quick rebound. A strong jobs report for May and June supports the idea that the US GDP reached its bottom in April, and the forecast for the second quarter has been too grim. Federal Reserve Governor Lael Brainard says one of the main reasons for the improvement in the US employment data is the fiscal stimulus, some of whose programs are coming to an end. Even if the rate of the spread of COVID-19 slows down, the economy “is likely to face headwinds,” she warns, which may result in a double-dip recession.

Brainard’s pessimistic tone hasn’t caused much stress in the financial markets. The liquidity volumes poured by the Fed and other world’s central banks are too big, so the stock indexes won’t stop growing.

Dynamics of money supply and MSCI World Total Return

![LiteForex: EURUSD forecast for 15.07.2020][3]

Source: Nordea Markets.

The stimulus sizes are so huge that the [S&P 500][1] just can’t fall too deep. Besides, the euro has its own growth drivers, so the [EUR/USD][2] is steadily growing. The price has tested the resistance at 1.14, and the euro bulls are expecting more good news provided by the Chinese GDP report, the ECB meeting and the EU summit to drive the price higher.

The markets are going back to the norm and start to feature a correct response to the news. They are rising when the actual data exceed the forecasts and vice versa. With this regard, the pessimistic forecasts suggesting a 45% drop in corporate profits in the second quarter are more likely to support the[ S&P 500][1] than to send it down, which has been proven by the reaction of the stock index to the release of the reports by JP Morgan and Citigroup. The[ S&P 500][1] should also be supported if the Chinese domestic data are positive. The forecasts for China’s GDP, industrial production, retail sales, and investments are not very strong. It is expected that China’s economy hasn’t yet returned to the pre-crisis levels. What if it isn’t so?

Dynamics of China’s economic indicators

![LiteForex: EURUSD forecast for 15.07.2020][4]

Source: Bloomberg

The ECB doesn’t consider further interest rate cuts. Furthermore, it is willing to gradually reduce the volumes of the liquidity poured in the markets, following the example of other central banks. It will be a positive factor for the euro. Another growth driver will appear if the EU governments adopt the French-German fiscal stimulus plan at the EU summit. The [EUR/USD][2] has been consolidating in the range of 1.11-1.14 for too long, it is time to go up. If the price retests the resistance at 1.14, the bulls will go ahead. If, of course, everything goes on as expected.

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Price chart of EURUSD in real time mode

![EUR/USD forecast: Euro wants to go up][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.

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