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Euro price forecast 23 November 2020

2020-11-23

2020-11-23

Euro ignores negative. Forecast as of 23.11.2020Dmitri Demidenko

Despite a number of bearish factors that could have earlier dropped the euro, the EURUSD is rising. What will be the trend? Let us discuss the Forex outlook and make up a [EURUSD][1] trading plan.

Monthly euro fundamental forecast

The correction of the US stock indexes and the concerns about a double- dip recession in the euro area do not stop the [EURUSD][1] bulls. The idea of the price growth to 1.2 already in 2020 looks more real than it did in early November. Furthermore, the USA is willing to introduce COVID-19 vaccines in less than three weeks. The vaccination is a key to the victory over the pandemic, global economic recovery, and the improvement of the global risk appetite.

New lockdowns amid the second pandemic wave in the euro area should have sent the [EURUSD][1] down. Bloomberg experts expect the euro-area PMI to go down below the critical level of 50 for the first time since June. If so, the pressure on the ECB will increase, making the central bank expand the monetary stimulus at the December meeting. However, this fact has already been priced in the major currency pair rates. Also, there are talks about the Fed’s monetary policy easing.

The news that the Treasury asks the Fed to return the $ 415 billion in unused funds that Congress gave the central bank for emergency lending programs is clearly political. Donald Trump, leaving the White House, hinders the reforms of the new US president. Trump tries to push Biden against the Senate and the House of Representatives after the change of leadership of the Treasury Department and the resumption of the idea of supporting the economy with cheap and affordable loans. Simultaneously, the absence of a ‘blue wave’ reduces the chance of a fresh massive fiscal stimulus. Under such conditions, most of the responsibility is on the Fed. Further deterioration of the US economy can force the Fed to resort to the ‘operation twist’ and the QE expansion.

Fed’s monetary easing is a bearish factor for the US dollar. Also, speculators have recently reduced dollar shorts, which could trigger a new wave of sell-offs. Some sellers are stepping back, but new dollar bears should come, so the euro will continue rising.

Dynamics of USD and speculative positions on US dollar

Source : Bloomberg

The number of new coronavirus cases decreases in the euro-area, investors expect the UK-EU trade deal shortly, which supports the [EURUSD][1] bulls. Twenty-four hours is plenty of time, and the negotiators can well strike a deal at the last moment. The Brexit deal is likely to send the [GBPUSD][2] up to 1.34-1.35, allowing the euro to get closer to $1.2.

Monthly [EURUSD][1] trading plan

I have many times noted that the euro-dollar tends to consolidate in the range of 1.16-1.2. However, the upper border of the range could move higher. This is because the US dollar bearish factors are now included in the exchange rates. The euro can well move into the trading channel of $1.18-$1.22 in December. Therefore, it is still relevant to buy the euro on the breakout of the resistance zone of $1.188-$1.189.

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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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  1. my.liteforex.com/trading/chart?symbol=EURUSD&returnUrl=true
  2. my.liteforex.com/trading/chart?symbol=GBPUSD&returnUrl=true
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