Euro price forecast 19 November 2020

2020-11-19

Euro chose the path. Forecast as of 19.11.2020Dmitri Demidenko

The correction of the US stock indexes is dangerous for the EURUSD bulls. However, the recovery of the global economy promises euro buyers good profits. Let us discuss the Forex outlook and make up a [EURUSD][1] trading plan.

Monthly euro fundamental forecast

What is your trading style? Will you sell an asset in the short-term, being ready to take the profit at any time if you see a correction in the uptrend? Or will you buy and hold the longs expecting the drawdown to end? If you answer this question, you will know how to trade the [EURUSD][1]. Effective vaccines will support global economic growth in 2021. However, the markets should remain unstable in the short-term. There is a strong demand for safe-haven assets, including the US dollar. But investors should sell them sooner or later.

Although vaccinations will take time, and the logistical challenges are enormous, the global economy will be stronger in a year or two than it is now. The US stock market could be overvalued now, reacting to the positive news about vaccines developed by Pfizer and Moderna. Nevertheless, the long-term outlook for the US stock indices is optimistic. The [EURUSD][1] long-term prospects are also positive. Coronavirus vaccines are not the only growth driver for the euro.

Donald Trump’s protectionism, political uncertainty in the USA, and an 11% drop of the USD from the March high resulted in the fact that the single European currency for the first time over many years has outperformed the greenback in the international settlements. Yes, the US dollar is the primary funding currency, it is the major currency in the conversion transactions and FX reserves of the world’s central banks, but this won’t hinder the [EURUSD][1] rally. It is enough that the central banks diversify the FX reserves in favor of the euro.

Dynamics of the US dollar’s and the euro’s shares in the global

payments

Source : Bloomberg

The victory over the coronavirus pandemic is not the only factor that can accelerate economic expansion. According to the WTO research, in 2020, the G20 countries have introduced 133 trade measures related to COVID-19. 84 of them were aimed at facilitating trade, 49 - to restrict it. The entire world expects the USA and China to lower the import tariffs. Based on Xi Jinping’s statement, Beijing is willing to do it.

Therefore, the euro’s long-term outlook is clearly bullish. However, the [EURUSD][1] bears can well develop a short-term correction down. The main reason for this is the [S&P 500][2] drawdown. BofA Merrill Lynch notes that the share of cash in global investors’ portfolios has approached the critical 4% mark, which usually serves as a signal for selling US stocks.

Dynamics of S &P 500 and cash in investment portfolios

Source : Bloomberg

Monthly [EURUSD][1] trading plan

Therefore, position traders should enter the [EURUSD][1] long-term longs on the corrections down to 1.18, 1.176, 1.172, and 1.167. Speculators could sell the euro in the short-term with narrow targets.

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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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