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EURUSD forecast for 10.09.2020

September 10, 2020

September 10, 2020

EUR/USD forecast: ECB is on the warpathDmitri Demidenko

Fundamental euro forecast for today

Christine Lagarde has a plan

Not by power, but by skill. To win battles, most often you need not strength, but intelligence. The enemy should taste the victory, get into a trap, and turn from a hunter into a victim. Christine Lagarde is going to start a war with the [EUR/USD][1] bulls. The euro buyers expect the ECB president to start verbal interventions or to hint at the QE expansion, claiming that the ECB can’t weaken the euro. At best, there could be a short-term correction, which, however, will allow investors to buy more euro at a cheaper price. The president of the European Central Bank needs a cunning plan, and she seems to have one.

There are hardly any doubts that the Governing Council will leave the interest rate the same, as well as the size of the emergency asset purchases of € 1.35 trillion. Bloomberg experts say the ECB should boost the QE by €350 billion by December and extend the program through the end of 2021. The ECB forecasts and Christine Lagarde’s speech at the press conference will be of key importance. Bloomberg’s source familiar with the matter says the previous inflation projections will hardly change, while the central bank’s GDP forecast will be revised up from the current -8.7%. It corresponds to the experts’ opinions. However, it won’t allow the ECB to further loosen the monetary policy. If the Governing Council sees that the euro-area economy should grow in the future, it won’t need to lower the interest rates and boost QE.

The opinion of Bloomberg’s experts about the ECB projections

![LiteForex: EURUSD forecast for 10.09.2020][2]

Source : Bloomberg

Bloomberg’s source says the ECB is not going to increase the pace of the asset purchases, at least now. It may discuss this matter in December if the GDP recovery slows down. It means that the ECB won’t signal either the further monetary expansion in September or the QE expansion this year. SO, it is natural that the euro is again up, trading above $1.18. I believe it is a part of Lagarde’s plan. The euro bulls should taste the victory, otherwise, they won’t get into a trap.

According to BNP Paribas, the ECB can’t stop the euro strengthening. Nomura believes that the ECB verbal interventions can’t break the [EUR/USD][1] uptrend. Commerzbank warns the ECB could start a currency war, while Barclays, Goldman Sachs, JP Morgan say that Christine Lagarde should still mention the euro exchange rate. Just because Mario Draghi used to do so.

I think the current ECB president should stress the euro-area inflation problems. If it doesn’t discourage the euro bulls, other tools will be used. C hristine Lagarde and Philip Lane speak within 24 hours after the press conference, their speeches should set the bulls back. Therefore, most large banks expect the euro to weaken versus the US dollar, suggesting buying it on the fall. I, however, expect the currency pair to jump up and down. It makes sense to sell the [EUR/USD][1] at the rise above 1.19.

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Price chart of EURUSD in real time mode

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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