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Euro price forecast 26 November 2020

2020-11-26

2020-11-26

Euro has enough power to continue rally. Forecast as of 26.11.2020Dmitri Demidenko

The USD weakening has contributed to the EURUSD rally. However, the euro has its own growth drivers. Let us discuss the Forex outlook and make up a [EURUSD][1] trading plan.

Weekly euro fundamental forecast

The financial markets are searching for a balance between the short-term negative from the second COVID-19 wave and the medium-term positive from the vaccines. The US domestic data signal the US economic recovery, though a little slower than earlier. The [EURUSD][1] continues to rally up to 1.2. In September, the ECB’s verbal interventions discouraged the euro bulls, but now, the euro buyers are going ahead.

The US stock indexes have been down a little amid the number of hospitalizations in the USA has been record-high during fifteen consecutive days. Nonetheless, the US stock market is close to all-time highs. The stock indices didn’t crash down, as Trump had suggested in the case of Biden’s victory. Furthermore, the [S&P 500][2] 7.7% rally since the election day has been the second-best result for a new president in 90 years. The stock market performance has significantly overtaken the rally in 2016 when Trump became the president. The growing demand for risk assets and lower political uncertainty are important drivers pressing down the safe-haven assets, including the US dollar. The financial markets react positively to Biden’s actions, which is a bearish factor for the greenback.

I can’t say the euro hasn’t got other growth drivers but for the dollar’s weakness. The current situation is similar to that in the late spring-early summer. The lockdowns are helpful; the number of coronavirus cases in the euro-area countries is declining. Six months ago, this fact, together with the fiscal stimulus and easing political risks, has started the [EURUSD][1] rally.

Dynamics of COVID-19 cases

Source : Financial Times

The CEOs of 55 of Europe’s leading industrial companies with a revenue of over €2 trillion express confidence in the euro-area economic recovery. They noted a significant improvement in the business environment, even before the vaccines’ good news hit the financial world. I think it is natural. The European economy has always been dependent on exports. The international trade increased by 12.5% in Q3, following a decline of 12.2% in Q2. According to the Netherlands Bureau for Economic Policy Analysis, global trade improvement is a strong factor supporting the euro-area economy and the euro. This is the fastest growth of the indicator after its most rapid decline in the entire history of accounting since 2000. __

The euro has domestic growth drivers. But still, most of the[EURUSD][1] rally results from the USD sell-offs also because of the Fed’s aggressive monetary expansion. According to the Fed’s November meeting minutes, the central bank is willing to correct its $120- billion asset purchase program if the circumstances change. But there is nothing about any active measure right sway. Morgan Stanley believes there is a 35% chance of the QE expansion in 2021.

Weekly[EURUSD][1] trading plan

So, if the [S&P 500][2] rally continues, the [EURUSD][1] could hit the level of around 1.2 already this year. However, the euro bulls first should consolidate the price above $1.19 and break out the resistance at $1.1955-$1.1965.

[EURUSD][3] current rate in the Forex market:

EURUSD = 1.19120

1-day change

-0.00016 (-0.01%)

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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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  4. my.liteforex.com/?category=analysts-opinions&slug=euro-has-enough-power-to-continue-rally-forecast-as-of-26112020&openPopup=%2Fregistration%2Fpopup