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EURUSD forecast for 24.08.2020

August 24, 2020

August 24, 2020

EUR/USD forecast: Dollar generates a new ideaDmitri Demidenko

Fundamental US dollar forecast for today

Investors will focus on the US presidential election in autumn

Markets are driven by investment ideas, which are generated first, then investors open positions, and finally, close them if something goes wrong. In spring, everybody was tracking the global risk appetite and the changes in the [S&P500][1] value, to buy or sell the dollar pairs. In summer, they were focused on the divergence in the economic expansion between the euro area and the US, which sent the [EUR/USD][2] to the highest level over the last two years. Once the market had had doubts about its efficiency, investors closed longs and sent the euro down.

The PMI report in August has ruined the idea of the leading performance of the euro-area GDP over the US growth. The PMI is thought to be a leading indicator for the GDP. The US composite PMI has been up to its eighteen-month high, and its European peer has fallen from 54.9 to 51.6, making the [EUR/USD][2] bulls exit longs. The US economy is being reopened after the lockdown introduced in the spring; it is surprisingly resilient to the coronavirus epidemic going in the country. The Eurozone’s growth is slowing down amid the rise in the number of new COVID-19 cases in Germany, France, and Spain to the levels recorded in May, and even in April.

Dynamics of PMI

![LiteForex: EURUSD forecast for 24.08.2020][3]

Source : Wall Street Journal

Also, there are problems in the euro-area labor market. So, the Forex analysts say that the European economy is more likely to have a W-shaped recovery, rather than a V-shaped one. The programs of the population retention in the labor force existing in the euro area do not encourage people to find new jobs. The labor market is dynamic when it goes through the phases of rising and fall. If the fall is artificially averted, can we expect the employment boom in 2021-2022? The actual unemployment level may not be at the official level of 7.8% but is likely to be above 9%, and in Spain, it can be close 20%. What will happen when the assistance programs are over?

In my opinion, things are not that bad. The growth in the new coronavirus cases in Europe results from the holiday season. Mostly young people are sick, most often asymptomatic, which explains the low number of hospitalizations and mortality. The GDP recovery will be slow both in the US and in the euro area, the markets need a fresh investment idea. It can well be the US presidential election. What is good for Donald Trump is good for the US dollar. Hence, the growing risks of Trump’s defeat will weigh on the USD.

Therefore, the [EUR/USD][2] can roll down in the short-term. But, in the long-term, the euro uptrend is likely to resume. My idea about the [middle-term consolidation][4] in the range of 1.158-1.188 looks more and more promising. So, I still recommend buying the euro on the rebound from the supports at $1.173, $1.168, and $1.162.

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Price chart of EURUSD in real time mode

![EUR/USD forecast: Dollar generates a new idea][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.

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  1. my.liteforex.com/trading/chart?symbol=SPX&returnUrl=true
  2. my.liteforex.com/trading/chart?symbol=EURUSD&returnUrl=true
  3. cdn.liteforex.com/cache/uploads/blog_post/eurusd/pmi-24-08-20.jpg?w=30&s=854bc2f071a0b0ea7fe4ab3d28c8d60b
  4. www.liteforex.com/blog/analysts-opinions/fundamental-us-dollar-forecast-for-today/
  5. my.liteforex.com/?category=analysts-opinions&slug=eurusd-forecast-dollar-generates-a-new-idea&openPopup=%2Fregistration%2Fpopup&utm_source=blog&utm_medium=article&utm_campaign=bonus
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  7. cdn.liteforex.com/cache/uploads/blog_post/eurusd/liteforex-blog-eurusd-24-08-20.jpg?q=75&w=1000&s=6df6bfea40d5e4567c6cfb9081a16b57