Logo

Posts

US dollar price forecast 9 November 2020

2020-11-09

2020-11-09

Dollar is set back by euphoria. Forecast as of 09.11.2020Dmitri Demidenko

Investors continue trading the idea of Joe Biden becoming the president. That is why the [S&P 500][1] features the best weekly rise since April and pushes the EURUSD up. How long will it continue? Let us discuss the Forex outlook and make up a [EURUSD][2] trading plan.

Weekly US dollar fundamental analysis

Euphoria rules the market. Investors forgot about both COVID-19, the US fiscal stimulus’s unsettled issue, and Donald Trump rejecting the voting results. Traders are satisfied with the less uncertainty around Joe Biden’s policy, hoping for lower volatility. Analysts suggest that the divided Congress won’t allow Biden to carry out radical reforms in tightening taxation and regulation of technology companies. As a result, the [S&P 500][1] grew by 7.3% in the first week of November, and the USD dropped to the lowest level since early September.

How long will the euphoria last? History proves that starting from 2000, if the [S&P 500][1] was growing on election day, it continued growing in November and December. The first years of presidential terms were also favorable for the US stock indexes. The [S&P 500][1] grew by 18.6% on average. However, the stock indexes’ trends during the time of the divided Congress, which prevented the White House from carrying out radical reforms, were controversial. During 45 years, starting from 1928, when one party controlled the US government, the stock market rose at an average rate of 7.46% annually, up from 7.26% in 46 years when the power was divided.

**Reaction of[S&P 500][1] to the political situation in USA **

Source : Wall Street Journal

In my opinion, the markets are going too fast. Investors want to join the stock market’s uptrend, forgetting about the negative. However, are some negative factors that should have their effect. First, political uncertainty continues. Donald Trump is challenging the election results. Because of the second round of voting in Georgia, we will know the partisan makeup of the U.S. Senate only on January 5. It creates obstacles to the agreement on the new fiscal stimulus. Until a fresh stimulus is provided, the US economy will be slowing down, which presses down both the global GDP and the risk appetite.

Second, the coronavirus vaccines haven’t yet been developed, and the COVID-19 pandemic continues in the USA and in the euro area. The numbers of new coronavirus cases, hospitalizations, and deaths are hitting all- time highs, so investors’ optimism is surprising. The epidemiological situation in Europe is deteriorating. France, Germany, and other countries are locked down. This fact suggests that the divergence in the economic growth and monetary policy is in favor of the [EURUSD][2] bears.

Finally, the U.S. dollar may not be falling amid the growth of the [S&P 500][1]. The negative correlation between stocks and the USD is the strongest at the time of uncertainty, also because of the US presidential election. Once uncertainty eases, the negative correlation should stop working.

Weekly[EURUSD][2] trading plan

Euphoria rules the market, but it can’t last for long. If the [EURUSD][2] bulls fail to hold the price above 1.188, the pair should roll down to 1.183 and 1.1785. Otherwise, if the resistance is held up, the euro could continue the rally up to $1.195-$1.196 and even $1.2. Next, large traders should take some profits and exit the longs.

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=SPX&returnUrl=true
  2. my.liteforex.com/trading/chart?symbol=EURUSD&returnUrl=true
  3. my.liteforex.com/?category=analysts-opinions&slug=dollar-is-set-back-by-euphoria-forecast-as-of-09112020&openPopup=%2Fregistration%2Fpopup&utm_source=blog&utm_medium=article&utm_campaign=bonus
  4. my.liteforex.com/deposit/?category=analysts-opinions&slug=dollar-is-set-back-by-euphoria-forecast-as-of-09112020&promo_code=BLOG&utm_source=blog&utm_medium=article&utm_campaign=bonus