Logo

Posts

EURUSD forecast for 17.07.2020

July 17, 2020

July 17, 2020

EUR/USD forecast: Dollar is risingDmitri Demidenko

Fundamental US dollar forecast for today

How deep will the EUR/USD fall?

The less you know, the better. The European Central Bank President Christine Lagarde hasn’t mentioned the disputes among the members of the Governing Council. She said the central bank currently expects to spend the full amount of its pandemic bond-buying program unless there isn’t a significant surprise, but the markets suggest something different. According to Bloomberg’s sources familiar with the matter, policymakers didn’t come to an agreement on whether the full program was likely to be used. Some Executive Board members argue that the improving economy may mean bond-buying could end before reaching the current cap. If it was officially announced, it would cancel the ECB’s baseline projection is for an 8.7% contraction in the euro-area economy this year. However, the ECB is not yet prepared to send such a message.

Lagarde stresses that the euro-area recovery remains partial and uneven, with risks still tilted to the downside. She says the ECB’s monetary stimulus will add 1.3% to the GDP and 0.8% to the inflation rate by 2022. The Governing Council is again divided into hawks and doves. The rich North is opposed to the poor South. So it is not surprising that some policymakers suggest the end of the bond-buying program, and other Executive Board members offer to expand it. According to the forecasts of the European Commission, the GDPs of Italy, France, and Spain will be down by approximately 11.5%, and Germany’s economy will lose half as much.

The lack of agreement among the ECB governors could eliminate such a benefit of the euro as the euro-area unity. It is extremely dangerous ahead of the EU summit. If the bloc doesn’t approve of the French-German 750 billion-euro recovery fund will set a date for an extraordinary meeting to continue discussions on this topic, the [EUR/USD][1] bulls will be set back.

In the US, however, the retail sales data and homebuilders’ outlook are is back at pre-pandemic levels. Furthermore, the Fed’s balance sheet fell by $210 billion since June 10, being back below $7 trillion. If the US economy performs better than it could be expected considering the growth in the daily COVID-19 cases to more than 70,000, then why should the Fed continue taking active measures? According to the forecast of Wall Street experts, the Fed’s balance sheet should rise to $8.5 trillion by the end of 2020, instead of $9.5 trillion expected earlier.

Forecasts for Fed balance sheet

![LiteForex: EURUSD forecast for 17.07.2020][2]

Source: Financial Times

In addition to the improved domestic data in the US, investors consider such a bullish driver for the greenback as the escalation of the US- China trade war. The White House is not happy that the Chinese GDP grew by 3.2% in the second quarter, while the US GDP is likely to be down by 10% in the same period. A faster economic recovery will allow China’s exporters to boost their share in the market, and so, make one more step forward to the world’s leadership.

In my opinion, the down moves of the [EUR/USD][1] are nothing more than just a correction. An increase in the number of coronavirus cases will suggest worse economic data of the US for June, which, amid the main investment idea based on the divergence in the economic growth, should encourage the [EUR/USD][1] bulls to go ahead. If the EU governments agree on the fiscal stimulus package, the euro buyers will feel more confident. In the meanwhile, the major currency pair meets my expectations and consolidates in the range of [1.11-1.14][3]. The euro is more likely to rise to $1.16 and higher than to fall to $1.11.

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][4]. 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][5] 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

![EUR/USD forecast: Dollar is rising][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.

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/fed-balance-17-07-20.jpg?w=30&s=01878510c9e1e7cd41226b6328144468
  3. www.liteforex.com/blog/analysts-opinions/forex-in-july-vikings-are-on-the-warpath/
  4. my.liteforex.com/?category=analysts-opinions&slug=eurusd-forecast-dollar-is-rising&openPopup=%2Fregistration%2Fpopup&utm_source=blog&utm_medium=article&utm_campaign=bonus
  5. my.liteforex.com/deposit/?category=analysts-opinions&slug=eurusd-forecast-dollar-is-rising&promo_code=BLOG&utm_source=blog&utm_medium=article&utm_campaign=bonus
  6. cdn.liteforex.com/cache/uploads/blog_post/eurusd/liteforex-blog-eurusd-17-07-20.jpg?q=75&w=1000&s=5b97703f7f46fbf8de4950a619cd8477