Logo

Posts

Forecast for USD price for 28 October 2020

2020-10-28

2020-10-28

Dollar rocks on the waves. Analysis as of 28.10.2020Dmitri Demidenko

The fast spread of COVID-19 across the USA and Europe gives a hand to [EURUSD][1] bears. Will the pandemic make traders forget about the US presidential election? Let’s find it out and make a trading plan.

Weekly fundamental forecast for the dollar

The fear of coronavirus makes US stock market bulls retreat, which results in the US dollar’s consolidation. The number of new cases hits a record high in the USA. The US also reported record high hospitalization rates since 19 August, while France recorded the highest daily death toll since April. Emmanuel Macron is rumored to introduce another lockdown. That dropped the [EURUSD][1] quotes below the bottom of figure 18. The fall might have been deeper if not for expectations of the Democrats’ victory on 3 November.

According to 75% of 59 Reuters experts, a blue wave will be the best option for the US economy. It will help the fiscal stimulus package worth $1.8 trillion pass easily through Congress. Experts forecast that the US GDP will draw down 4% in 2020 and expand 3.7% and 2.9% in 2021-2022, respectively.

Reuters survey: What will support the US economy?

###

Source: Reuters.

A blue wave and post-election reduction in political uncertainty suggest that volatility may fall. That’s good news for [S&P 500][2] and bad news for the greenback. The world’s largest financial manager BlackRock, which manages assets worth $7.3 trillion, thinks that the USD will be moderately weak for 1-3 years. The giant joints USD bulls, such as Goldman Sachs and UBS. Its position explains why hedge funds are selling out dollars in the forward market.

USD index and speculative positions in USD

Source: Bloomberg.

Uncertainty feeds the dollar. The markets seem to know already the presidential election’s results. The election factor excluded, the second wave may drop [EURUSD][1] quotes significantly. We may face the global economy’s double recession and another collapse of the [S&P 500][2] and the greenback’s hike like it was in March. All the previous achievements will be canceled. Few are those who will remember the housing prices’ growth in the USA and the fifth consecutive month of increase in US durable goods orders.

US durable goods orders

Source: Bloomberg.

At first sight, the second pandemic wave must push the ECB to active actions as early as at the 29 October meeting. However, QE expansion won’t solve the COVID-19 issue. European banks stop crediting, fearing bad debt growth. So, Christine Lagarde’s main task is to calm down financial markets. A hint about an additional stimulus in December may help with that task.

Weekly trading plan for [EURUSD][1]

Thus, the pandemic returned to Forex’s forefront and consolidated the USD. However, I think it’s still possible to exploit the factor of Joe Biden’s victory in the short term. The [EURUSD][1]’s retracement from support at 1.1745 or return to 1.1815 and higher may be a signal to open long positions for impatient and adventurous traders.

P.S. Did you like my article? Share it in social networks: it will be the best “thank you” :)

Ask me questions and comment below. I’ll be glad to answer your questions and give necessary explanations.

Useful links:

  • I recommend trying to trade with a reliable broker [here][3]. The system allows you to trade by yourself or copy successful traders from all across the globe.
  • Use my promo-code BLOG for getting deposit bonus 50% on LiteForex platform. Just enter this code in the appropriate field while [depositing][4] your trading account.
  • Telegram chat for traders: . We are sharing the signals and trading experience
  • Telegram channel with high-quality analytics, Forex reviews, training articles, and other useful things for traders

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.

Rate this article:

{{value}}

( {{count}} {{title}} )

  1. my.liteforex.com/trading/chart?symbol=EURUSD&returnUrl=true
  2. my.liteforex.com/trading/chart?symbol=SPX&returnUrl=true
  3. my.liteforex.com/?category=analysts-opinions&slug=dollar-rocks-on-the-waves-analysis-as-of-28102020&openPopup=%2Fregistration%2Fpopup&utm_source=blog&utm_medium=article&utm_campaign=bonus
  4. my.liteforex.com/deposit/?category=analysts-opinions&slug=dollar-rocks-on-the-waves-analysis-as-of-28102020&promo_code=BLOG&utm_source=blog&utm_medium=article&utm_campaign=bonus