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EURUSD forecast for 09.09.2020

September 9, 2020

September 9, 2020

EUR/USD forecast: Dollar goes aheadDmitri Demidenko

Fundamental US dollar forecast for today

EUR/USD slides down not only because the ECB is expected to sound

dovish

The [EUR/USD][1] is running down, as the global risk appetite declines, investors worry about a no-deal Brexit, and the safe-have demand is increasing. The 10-year Treasury yield has had the worst daily drop over a month. It took the [Nasdaq Composite][2] only three days to enter the correction territory, which means a 10% decline in the stock index from the levels of recent historical highs. The equities of US tech companies have crashed, as many analysts suggest that the market has been overvalued during the pandemic. The safe-havens, Treasuries, the yen, and the greenback are the beneficiaries.

The growing demand for the US Treasuries is also supported by the concerns that the correction of the US stock market will make businesses postpone plans for a large-scale issue of corporate bonds. In August, there were issued $108 billion in corporate bonds, which is an all-time high. The demand for corporate bonds encouraged asset managers to sell off Treasuries, which increased the yields. In September, the process has reversed.

Dynamics of corporate bonds issue

![LiteForex: EURUSD forecast for 09.09.2020][3]

Source : Wall Street Journal

The euro is also down amid the information published by Financial Times about the UK plans to override the agreement with the EU signed last year. It is said that the UK will release the news on the change in the internal market legislation. According to the bill, the UK doesn’t have to notify the EU about the state aid, and the completion of the customs declarations at the Irish border would be optional. The risk of a no- deal V\Brexit has soared, and the pound crashed, being followed by the euro.

Dynamics of euro and pound

![LiteForex: EURUSD forecast for 09.09.2020][4]

Source : Trading Economics

The correction of the US stock indices, the rise of the safe-haven demand, and the concerns about the UK withdrawal from the EU without a deal accelerate the [EUR/USD][1] drawdown, resulted from the expectations for the ECB dovish tone. Investors see that the ECB, unlike the Fed, failed to improve the financial conditions, which can affect the future economic data. The US domestic data are likely to be better than those of the euro-area in the near future. So, the euro won’t be able to use such a growth driver as the divergence in the economic expansion.

Dynamics of the financial conditions in the USA and the euro area

![LiteForex: EURUSD forecast for 09.09.2020][5]

Source : Nordea Markets

Furthermore, markets worry about the second wave of the COVID-19 pandemic in Europe and the problems of the euro-area exports. So, the euro drawdown looks natural. In July, German exports of goods and services to China contracted by 0.1%; to the USA -by 17%; to the UK -by 12.6%; to other EU countries – by 9.6% on an annual basis.

Rabobank suggests the [EUR/USD][1] could drop to 1.7 in September. Capital Economics claims the correction of the US stock market won’t last long. The stock indexes should resume growing as the global economy is recovering. I agree with these viewpoints. The euro correction could get deeper, but it is just a correction to the uptrend, which gives a chance to buy the pair cheaper.

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Price chart of EURUSD in real time mode

![EUR/USD forecast: Dollar goes ahead][8]

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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