Logo

Posts

Forecast for EURUSD for 27 July 2020

July 27, 2020

July 27, 2020

Forecast for EUR/USD: Euro will put eggs in different basketsDmitri Demidenko

Fundamental forecast for euro for today

EUR/USD may continue to rally on diversification of investment

portfolios and gold/forex reserves

I’m pleased when my forecasts hit the bullseye, and even more so when they are fundamentally based. In June, I bet on the difference between Europe’s and the US’ epidemiological states, which suggested a faster economic recovery of the eurozone . The epic French-German fiscal stimulus project allowed me to suppose that [EUR/USD][1] would have new growth drivers: a flow of capital from the New World to the Old World and diversification of gold/forex reserves to the advantage of the euro. I’m pleased that my forecasts have worked.

The States’ inability to combat the pandemic put it at a disadvantage. According to Markit, the US business activity in July fell short of Bloomberg’s forecasts while Purchasing managers’ index of the eurozone was a feast to the eye. True, Europe’s GDP must have drawn down deeper than the US peer, but it’s likely to return to pre-crisis levels faster. Divergence in economic growths is an important factor in pricing in both Forex and stock markets.

European business activity index

![LiteForex: Forecast for EURUSD for 27 July 2020][2]

Source: Financial Times.

Global investors haven’t needed to diversify their portfolios in the recent years. The bet on American high-tech stocks worked really well. However, the higher [S&P 500][3] gets, the more overbought it looks - even more so because of the complicated epidemiological situation and growing risks of the US GDP’s W-shape recovery. As a result, one wants to put eggs in different baskets, and European stocks look attractive after the EU has accepted the French-German offer. According to Goldman Sachs, the EU stocks will have grown 13% in dollar terms and outperformed American peers within 12 months.

Evolution of European and American stocks

![LiteForex: Forecast for EURUSD for 27 July 2020][4]

Source: Bloomberg.

The idea of replacing the USD with the single European currency in the central banks’ reserves looks interesting too. A famous billionaire Ray Dalio thinks that besides a trade war, a technology war and a geopolitical war, there can be a capital war between the U.S. and China. People’s Bank of China’s active diversification of over $3 trillion gold/forex reserves won’t do any good for the greenback.  The USA’s refusal to pay back Chinese-held treasury debt will only speed up the process.

No doubt, some pitfalls should be considered when it comes to [EUR/USD][1]’s bullish trend. Growth of new Covid cases in some areas of Spain and South-Eastern Europe suggests that a recovery won’t be as smooth as one would want to. A weaker dollar is a boon for American technological companies that earn most of their profits from abroad, which makes investment portfolio diversification less necessary.  The White House continues to hope for a V-shape recovery. However, all those arguments have looked unconvincing so far while the euro’s bullish trend is obvious. Continue using retracements for opening long-term long positions with targets at $1.18 and $1.22.

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][5]. 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][6] 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

![Forecast for EUR/USD: Euro will put eggs in different baskets][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.

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/pmi-euro-area-27-07-20.jpg?w=30&s=2a0ea0cf9fec388aca5723fce9b6657a
  3. my.liteforex.com/trading/chart?symbol=SPX&returnUrl=true
  4. cdn.liteforex.com/cache/uploads/blog_post/eurusd/stocks-27-07-20.jpg?w=30&s=88def6d6cd232d0d0ec4e7096a613b9b
  5. my.liteforex.com/?category=analysts-opinions&slug=forecast-for-eurusd-euro-will-put-eggs-in-different-baskets&openPopup=%2Fregistration%2Fpopup&utm_source=blog&utm_medium=article&utm_campaign=bonus
  6. my.liteforex.com/deposit/?category=analysts-opinions&slug=forecast-for-eurusd-euro-will-put-eggs-in-different-baskets&promo_code=BLOG&utm_source=blog&utm_medium=article&utm_campaign=bonus
  7. cdn.liteforex.com/cache/uploads/blog_post/eurusd/liteforex-blog-eurusd-27-07-20.jpg?q=75&w=1000&s=c2eebb873cab8b0737933a076358c24c