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US dollar price forecast 5 April 2021

2021-04-05

2021-04-05

Dollar is to reveal its true nature. Forecast as of 05.04.2021Dmitri Demidenko

Forex as changeable as the weather. Following the cold winter and the undivided dominance of the US dollar, warmth and a change in investor sentiment are entering the market. Let us discuss the Forex outlook and make up a [EURUSD][1] trading plan.

Weekly US dollar fundamental forecast

In April, it is too late to be pessimistic about the [EURUSD][1] outlook, and it is too early to be optimistic. Europe faces a gloomy spring as the continent manages the vaccine shortage, more infectious variants of COVID-19, and pandemic fatigue. However, the euro bulls hope that the epidemiological situation will soon improve, the European Recovery Fund will be ratified, and the euro-area economy will rebound, also due to the USA.

In March, the US labor market added 916,000 new jobs. In addition to the revision of the January and February employment up and the drop in the unemployment to a pandemic low of 6%, it allows optimists to say that the US economy undergoes radical changes. Pessimists, on the contrary, note that another 8.4 million new jobs are needed for the labor market recovery. The US has a long way to go, and the Fed has no choice but to continue monetary stimulus and keep rates at current levels until at least 2023.

Dynamics of US employment

Source : Bloomberg

The financial market reaction to the release of the US jobs report was muted as the stock market was closed due to Good Friday, and the bond market had reduced working hours. U.S. Treasury yields received a bump higher following the report, with the 10-year rate climbing as high as 1.724%, which somehow discouraged the [EURUSD][1] bulls. Investors shifted their focus to the report on the ISM services PMI data. The market should feature a more genuine reaction then.

The update of the IMF forecasts for global growth is also worth attention. In January, the IMF expected to see the global GDP at 5.1%. However, due to a new fiscal stimulus package from Joe Biden and accelerated vaccinations in the USA, the estimate is likely to be raised. Much of the International Monetary Fund’s optimism is associated with the United States, which will become the engine of global economic growth in 2021. It would seem that American exclusivity will continue to support the USD rally, but a lot can change in the second part of spring.

Analysts are increasingly speaking about the two-speed economy. Among the leaders are the United States, China, UK, and other countries where vaccines are being actively introduced. The outsiders are emerging markets, whose access to drugs from Pfizer, AstraZeneca, Moderna, and other companies is limited, and Europe, where the vaccination company is progressing extremely slowly. However, the EU vaccination rate could increase, and the export-led euro-area economy could benefit from the increase in US imports.

Weekly [EURUSD][1] trading plan

Under such circumstances, it is important to choose the right time. It should be too early to buy the euro, but it is already too late to sell the euro-dollar actively. The potential of the [EURUSD][1] downtrend looks limited, and it should soon be relevant to buy the pair on the price decline to 1.158-1.164. However, until the EURUSD price consolidates above 1.184, bears continue to dominate in the market, and it is still relevant to enter short-term sell trades.

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