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EURUSD forecast for 11.08.2020

August 11, 2020

August 11, 2020

EUR/USD forecast: Dollar avoids responsibilityDmitri Demidenko

Fundamental U.S. dollar forecast for today

Politics supports the euro

The value of a currency is determined by trust. Goldman Sachs says the dollar is in danger of losing its status as the world’s reserve currency . JP Morgan doesn’t see any signals of it. But the fact is the confidence in the euro has significantly increased. Germany, France, and other EU countries are willing to help in the fight against the pandemic. Unlike Donald Trump, who tries to shift responsibility to state governors.

The extension of the financial aid package in the USA is not yet clear. The White House is not willing to pay the unemployed more than $300 a week. The rest, according to Trump, should be paid by the state governments. First, $100 was announced, next, States were said to pay $300. The governors said they can’t afford these payments, as the states are trying to manage the costs of the pandemic. They called on Republicans and Democrats to continue the dialogue. Although the problem has not been solved, the US stock indexes do not fall. Some analysts suggest that the agreement on the unemployment benefits will still be reached. Although the number of COVID-19 cases surged in July, the economic data were positive, which also supports the S&P 500. Moreover, the epidemiological situation in the USA started improving in August. Can the pandemic be managed without lockdowns?

The US economy can well continue recovering, but it will do it slower than the euro area. In addition to lower risks of the euro-area breakup, it is the key growth driver of the [EUR/USD][1]. According to Bloomberg, the euro-area GDP will grow by 5.5 in 2021, which is 1.5% higher than the US economy. Since 1992, the euro-area has outperformed the US in economic growth only 8 times. That is why the euro’s correction is not deep, and the asset managers are bullish on the single European currency.

Dynamics of net euro long positions

![LiteForex: EURUSD forecast for 11.08.2020][2]

Source: Bloomberg

Earlier, overseas investors were bearish on the euro-area assets, also because of the risks of the EU breakup. Now, the sentiment has completely changed. They do not like that Donald Trump is always truing someone to put the responsibility on. He blames the Fed, China, and now the state governors. It is hard to admit one’s mistakes, but the Americans also see the real situation. They are going to make the right choice on November 4. It is good they have the choice.

Positive factors for Trump are the growth drivers for the US dollar. So, the decline in Trump’s approval ratings is a good reason to buy the [EUR/USD][1]. The euro’s correction doesn’t start, although many wait for it. Mizuho says the EURUSD should be up to 1.3 in July 2021, as the euro is as strongest politically as ever. I stick to the former scenario. After the price rebound from the dynamic supports levels of 1.172, 1.166, and 1.163, enter longs at the high of the breakout bar.

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Price chart of EURUSD in real time mode

![EUR/USD forecast: Dollar avoids responsibility][5]

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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