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Euro price forecast 14 December 2020

2020-12-14

2020-12-14

Euro: one way or another. Forecast as of 14.12.2020Dmitri Demidenko

Neither ECB nor Brexit could press the euro down. There is a small chance for the [S&P 500][1] correction or Fed’s hawkish tone. Will the [EURUSD][2] rally continue? Let us discuss the Forex outlook and make up a trading plan.

Weekly euro fundamental forecast

What can stop the [EURUSD][2] bulls? Where is the finish? When will the euro start a correction down? These questions bother the Forex traders. The euro has risen too high; however, the ECB didn’t surprise financial markets at the December meeting. How can the ECB be satisfied with the current situation? The pound’s crash amid the talks about a no-deal Brexit didn’t affect the euro positions. Moreover, the growth of the [GBPUSD][3] after the UK-EU talks resumed could support the euro rally. Will the euro reach $1.25$ soon?

After Christine Lagarde had said that the ECB would monitor the exchange rate and suggested that the ECB may not need to use the entire amount of the Pandemic Emergence Purchase program, it became clear that the European central bank wouldn’t set the [EURUSD][2] bulls back. Bears still hope for a no-deal Brexit, the US stock indexes correction, and…the Fed, which could discourage the greenback sellers with the reluctance to launch the ‘operation twist.’

Following the dinner meeting of  British Prime Minister Boris Johnson and European Commission President Ursula von der Leyen, the pound was set to prepare for the UK withdrawal from the EU without a deal. The [GBPUSD][3] dropped to level 1.314 indicated [earlier][4]. According to a Financial Times source familiar with the matter, the negotiators found a way out of the impasse. The main sticky point was the difference in the goals. The UK wanted to defend its sovereignty, and the European Union feared unfair competition. A compromise suggests if one of the two sides is discontent, it could introduce tariffs unilaterally. The pound grew and supported the euro.

Source : Trading Economics

If anyone is concerned about a close deadline, there is still time for London and Brussels to ratify the agreement. Negotiations could continue until Christmas, according to a senior EU official.

The [S&P 500][1] was growing on the expectations that the US Congress should adopt the additional fiscal stimulus. However, the rally has slowed as there are problems with approving a $908 billion project put forward by the coalition. One way or another! The bipartisan commission decided to split the aid package. The first one is $ 746 billion, including money for small businesses, assistance for the unemployed, funding for COVID-19 preventive measures. The second package is $160 billion suggested for local government and liability advocacy. Such an approach may provide the US economy with the resources, which will allow the US stock indexes to continue the rally.

Weekly [EURUSD][2] trading plan

The Fed keeps its powder dry while saying that all tools to support the economy remain on the table. At the December meeting, the Federal Reserve should go away from its earlier statements suggesting that its $ 120 billion per month emergency asset purchase program will continue until the economic recovery meets certain conditions. A more dovish tone will maintain pressure on the US dollar. Unless Brexit, the [S&P 500][1] correction, or the Fed discourage the euro bulls, the [EURUSD][2] can break out the resistance at 1.216 and go up to $1.22 and $1.224.

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=SPX&returnUrl=true
  2. my.liteforex.com/trading/chart?symbol=EURUSD&returnUrl=true
  3. my.liteforex.com/trading/chart?symbol=GBPUSD&returnUrl=true
  4. www.liteforex.com/blog/analysts-opinions/pound-rolls-the-dice-forecast-as-of-09122020/