Logo

Posts

Euro price forecast 9 February 2021

2021-02-09

2021-02-09

Euro remembers everything! Forecast as of 09.02.2021Dmitri Demidenko

In May-June 2020, the foundation was laid under the [EURUSD][1] uptrend amid the reopening of the euro-area economies, increased global risk appetite, and EU unity. History repeats itself. Let us discuss the Forex outlook and make up a trading plan.

Weekly euro fundamental forecast

There are three men in a boat (to say nothing of the dog). When the world’s leading economies, China, the US, and the euro area, are on the same side, it is difficult to expect that the growth rate increase in one of them will significantly strengthen the national currency. Especially when this currency is the main safe-haven asset, it is extremely sensitive to global risk appetite changes. A soon adoption of the US new fiscal stimulus package by the Congress, easing political risks in Europe, and the end of the COVID-19 seasonal peak are pushing the [EURUSD][1] up.

The United States is the world’s largest net importer. Joe Biden’s new bailout package will boost domestic demand while helping export countries’ economies and stock markets. Therefore, the export-led euro- area economy should benefit from the US fiscal stimulus. If there are growth drivers in the US and China that should work in 2021, they will support other economies. If so, Senate approval of $ 1.9 trillion in fiscal stimulus and House review of the bill are powerful growth drivers not only for the [S&P 500][2] but for the euro as well. Yes, Goldman Sachs suggests that the final aid package will be $1.5 trillion, but this amount should be enough to accelerate the US GDP up to 11% in the second quarter and ensure an annual growth of 6.8% in 2021.

The [EURUSD][1] bulls are encouraged by the reopening of the euro-area economies after the lockdown. The first is Iceland. It is likely to be followed by Denmark, Belgium, and other countries, where the number of infections is declining and rolling down from the peaks.

Dynamics of COVID-19 cases in Eurozone and USA

Source : Nordea Markets

The share of current cases, % of peak

Source : Nordea Markets

The easing of the political risks in the euro area also supports the euro. Mario Draghi she’ll make a common euro-area budget a policy priority for Italy. The idea originated in France at the height of the euro-area debt crisis in 2012. Its proponents argued that a shared budget was needed to stabilize the economy during recessions. A joint budget has been seen as a key missing piece in the euro’s architecture. Super Mario had called for euro-member states to forge a common budget when he was in charge of Europe’s central bank. But now he’s doing it as Italy’s leader.

Thus, the current [EURUSD][1] market sentiment resembles the events of mid-2020. At that time, the reopening of the economies after lockdowns, the rapid growth of world stock indices and global risk appetite, as well as the unity of the EU, which created the European recovery fund, laid a solid foundation under the [EURUSD][1] uptrend. Nowadays, the euro-area economies are about to reopen. The [S&P 500][2] is rallying up amid strong corporate reporting and hopes for a new stimulus package, and Rome is calling for a shared budget.

Weekly [EURUSD][1] trading plan

The [EURUSD][1] bulls are about to take by storm level 1.208, which was earlier the main support. If the level is broken out upside, the euro- dollar should continue to rally up to 1.2125, 1.215, 1.221 and 1.225. I would consider a failure in the first level test to confirm the signal that the level breakout at the second try will ensure the uptrend. However, everything can happen in Forex.

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