EURUSD forecast for 13.08.2020

August 13, 2020

EUR/USD forecast: Dollar bets on redDmitri Demidenko

Fundamental U.S. dollar forecast for today

USD bulls do not have enough power for a counter-attack

Dollar’s success didn’t last long! The [EUR/USD][1] bears couldn’t develop a correction. Did they really have any chances? The [S&P 500][2] marks the second record high ever, republicans and democrats are far from reaching an agreement on the extension of the financial aid package, the Fed’s officials suggest that the euro-area economy is recovering faster than the U.S. growth. The [strategy][3] of trading the price rebound from the support zone of [1.172-1.173][4] has worked out already twice in August. The euro bulls seem to be willing to go ahead.

The U.S. stock indexes are about to hit new all-time highs supported by the U.S. economic data are positive and the safety cushion of the huge volume of liquidity provided by the Fed. The higher rises the [S&P 500][2], the more experts suggest a correction, but it doesn’t occur. The bears warn about the US-China trade war escalation, the deterioration of the US economic data. But the U.S. stock indices are still growing. Yes, according to Bloomberg research, if China were on a straight-line track to hit its target, exports from the U.S. of goods listed under the agreement would have hit $71 billion over the first half of the year. They are now at $33.1 billion.

Dynamics of U.S. exports

![LiteForex: EURUSD forecast for 13.08.2020][5]

Source: Bloomberg

In my opinion, the White House isn’t interested in the trade war because of the high risks of the U.S. stock indexes drawdown, the stock indexes are now one of the few Trump’s benefits in the upcoming presidential election. The U.S. administration is now concerned with other problems. For example, Republicans want to find a compromise with Democrats who do not agree with less than $ 2 trillion in fiscal stimulus. The U.S. president says their demands are ridiculous, but nevertheless, the U.S. management doesn’t seem to be effective. In addition to the growth gap, it is a good reason to buy the [EUR/USD][1]. The latter idea seemed to work out already. However, the Federal Reserve Bank of Boston President Eric Rosengren openly says that EU success in fight with COVID-19 results in the leading performance of the euro-area GDP over the U.S., so it is still relevant.

The former euro’s growth drivers still work, while the dollar is losing support from the U.S. Treasuries. The rise in the Treasury yield results from the redistribution of assets by investment portfolio managers who, on the eve of auctions, sold securities on the secondary market. Primary placements ended, and the long positions were closed. Furthermore, Italy will sell 30-year debt at auction, it offers yields almost twice as much as peers in Spain and Portugal. The growth of the euro-area debt market rates is also a positive factor for the [EUR/USD][6]

Dynamics of euro-area bond yields

![LiteForex: EURUSD forecast for 13.08.2020][7]

Source: Bloomberg

Therefore, the market is rather bullish on the EUR/USD, buying the pair above 1.17. Investors expect the rally to continue towards 1.25 in 2021 unless any serious shocks suggest the middle-term consolidation. If the [EUR/USD][1] breaks out the resistance at 1.188, the bulls will go ahead.

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Price chart of EURUSD in real time mode

![EUR/USD forecast: Dollar bets on red][10]

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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