Forecast for EURUSD for 31 July 2020

July 31, 2020

Forecast for EUR/USD: Dollar lost its nervesDmitri Demidenko

Fundamental forecast for dollar for today

Donald Trump eclipses US macrostatistics again

If Donald Trump hadn’t lost his nerves, [EUR/USD][1] bears could have prevented the attack of their opponents following the publication of statistics on the US GDP and jobless claims. The US president suggested the November presidential election be postponed until people can vote properly and safely. Asking to a question during his press conference later on, he replied: “Do I want to see a date change? No. But I don’t want to see a crooked election”. Politics has always been a negative factor for the greenback. The euro had a new impulse to rally on the early interference of the political factor.

According to Deutsche Bank, all that potentially delays a smooth transition of power is a source of uncertainty for dollar assets and negatively affects the US currency. The election will hardly be delayed as it’s the power of Congress. The Republican leaders didn’t welcome Trump’s suggestion but they can be contested. If the current president loses, the risk of such a scenario will increase.

The president’s tweets eclipsed the US economy’s worst drawdown since 1940 (minus 32.9%) and growth of jobless claims to 1.43 million. We can say goodbye to a V-shape recovery of GDP. The States’ situation is extremely bad: the fear of infection decreases economic activity, the unemployment rate is growing and a fiscal stimulus package cut reduces consumer spending. However, these factors aren’t new and they have already been considered in [EUR/USD][1]’s quotes .

Jobless claims in the USA

![LiteForex: Forecast for EURUSD for 31 July 2020][2]

Source: Bloomberg.

Statistics on the German GDP turned out worse than expected (-10.1% q/q). Still, Goldman Sachs believes Europe’s economic growth will outrun the US in 2020 due to a better local control over the virus, better macro-indicators and a better package of monetary and fiscal stimuli. JP Morgan forecasts that Germany’s GDP will drop 4.3% this year and will exceed its pre-crisis level in 2021. Its American peer will have been 2.5% less than the pre-pandemic value by the end of the next year after its 5.2% reduction in 2020.

Covid dictates to both economy and politics. A new series of US downbeat statistics may draw the economic surprise index down from the area of record highs, and the uncertainty about the elections may become a new driver for [EUR/USD][1] bulls. The level of $1.2 that seemed unreachable in the middle of May becomes closer and closer. I wouldn’t be surprised if my [forecast of $1.22][3] was realised earlier than expected. Buying at retracements remains the main work strategy, even more so because there can be a new reason for that soon. Publications of European GDP values are likely to indicate that other economies of the eurozone felt worse than Germany in Q2.

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Price chart of EURUSD in real time mode

![Forecast for EUR/USD: Dollar lost its nerves][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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