EUR/USD Forecast and News
EUR/USD falls amid Sino-American tensions ahead of Non-Farm Payrolls
EUR/USD is trading around 1.1850, down amid a risk-off mood stemming from President Trump's move against China's TikTok and WeChat. Tension is mounting ahead of the highly uncertain Non-Farm Payrolls.
Latest EUR News
Technical Overview
Euro/dollar is trading above the 50, 100, and 200 Simple Moving Averages on the four-hour chart, and benefits from upside momentum. The Relative Strength Index has moved away from the 70 level – further away from overbought conditions.
Overall, bulls have the upper hand.
Resistance awaits at 1.1850, which provided some support when EUR/USD traded on higher ground. It is followed by the 1.1909-1.1916 area – combining July's and August's peaks. The next level is the psychologically significant 1.20.
Support awaits at the daily low of 1.1820, followed by 1.1780, which was a stepping stone on the way up. Next, 1.1730 and 1.17 provide support.
Fundamental Overview
Negative Non-Farm Payrolls? That could turn to make the recent slide short-lived – like TikTok's videos. President Donald Trump hit ByteDance, the Chinese owner of the popular social network with an executive order that will likely hasten its firesale to Microsoft.
While TikTok has been in the spotlight for several weeks, the more surprising move came against WeChat – lesser-known in the West, but one of China's largest platforms – considered in some circles as more robust than Facebook, LinkedIn, and others. Shares in Asia and S&P 500 futures dropped, boosting the safe-haven dollar.
The move comes ahead of talks between the US and Chinese trade officials ext week, aimed to take stock of the Phase One deal. When referring to the accord, the world's largest economies expressed satisfaction.
Stoking tensions may serve a political cause – Trump is trailing rival Joe Biden ahead of the presidential elections and focusing on China may help the incumbent narrow the gap and could be forgotten when negotiators meet and smile.
On the other hand, the greenback's gains remain limited amid stalled talks between Republicans and Democrats over the next relief package. Steven Mnuchin, America's Treasury Secretary, said that there has been some progress on several topics but no advances on others.
The federal top-up of $600/week to the unemployed is the most significant help that expired at the end of July, and consumption could decline without it. The stalemate in talks is weighing on the dollar as it implies a weaker economy.
The tie-breaker is July's all-important Non-Farm Payrolls report. Expectations have been cooling down throughout the week, after employment components in the purchasing managers' indexes pointed to contraction. Moreover, ADP's private-sector labor figures showed a meager restoration of only 167,000 positions, nearly a tenth of 1.5 million expected.
While the most recent jobless claims figures dropped, the data refers to the latter part of July, after NFP surveys were held, thus making it irrelevant for the upcoming publication.
The economic calendar is pointing to an increase of 1.5 million jobs and a small decrease in the double-digit unemployment rate. However, real estimates range from a loss of jobs to an even greater one.
See:
- Non-Farm Payrolls complicated by coronavirus and confusing data, dollar, gold implications
- Nonfarm Payrolls Preview: Hints point to an awful July
- US Non-Farm Payrolls July Preview: A dual track labor market or imperfections in the data?
The deterioration is a result of coronavirus' resurgence from mid-June, resulting in more deaths in July.
Source: New York Times
COVID-19 cases are rising also in the old continent, with over 1,000 daily cases in Germany, France, and Spain. Nevertheless, the old continent's better situation provides an advantage for the euro. German industrial output beat estimates with a bounce of 8.9% in June, also supporting the common currency.
All in all, Sino-American relations, fiscal stimulus talks – and Non-Farm Payrolls stand out.
SPECIAL WEEKLY FORECAST
Interested in weekly EUR/USD forecasts? Our experts make weekly updates forecasting the next possible moves of the euro-dollar pair. Here you can find the most recent forecast by our market experts:
EUR/USD Weekly Forecast: Non-Farm Payrolls may trigger much-needed (temporary) correction
Europe's coronavirus advantage over the US has been one of the prominent reasons for EUR/USD's advance. Can the rally continue? The next moves mostly depend on the dollar side of the equation – with Non-Farm Payrolls standing out. Summer is proving volatile for the world's most popular currency pair.
Big Picture
EUR/USD Bullish Themes
EUR/USD Bearish Themes
Latest EUR Analysis
Editors' picks
EUR/USD falls amid Sino-American tensions ahead of Non-Farm Payrolls
EUR/USD is trading around 1.1850, down amid a risk-off mood stemming from President Trump's move against China's TikTok and WeChat. Tension is mounting ahead of the highly uncertain Non-Farm Payrolls.
GBP/USD retreats amid doubts about the furlough scheme, dollar strength
GBP/USD is trading closer to 1.31 as UK Chancellor Rishi Sunak said the furlough scheme that is underpinning the economy cannot last forever. The dollar is gaining ground amid geopolitical tensions ahead of the Non-Farm Payrolls.
USD/JPY clings to modest gains above mid-105.00s, focus remains on NFP
USD/JPY gains some positive traction on Friday and moves way from weekly lows. A goodish pickup in the USD demand seemed to be the only factor lending support. A combination of negative factors might cap the upside ahead of the US jobs report.
Gold consolidates near record highs, flat-lined around $2060 area ahead of NFP
Concerns about escalating US-China tensions pushed gold to fresh record highs on Friday. A goodish pickup in the USD prompted some profit-taking amid overbought conditions.
WTI struggles to keep $42.00 amid risk-off in Asia
WTI extends the previous day’s losses from $42.79, recently bounces off the intraday low. US-China and Washington-Ottawa tussles join dimming hopes of US stimulus to weigh on the risk-tone.
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EUR/USD Yearly forecast
How could EUR/USD move this year? Our experts make a EUR/USD update forecasting the possible moves of the euro-dollar pair during the whole year. Don't miss our 2020 EUR/USD forecast!
2020 FORECAST FOR EUR/USD
In our EUR/USD Price Forecast 2020, our dedicated contributors expect the bearish trend to slow down during the year. By the end of the year 2019, the average outlook for the pair was 1,1186. Read more details about the forecast.
From July 2019 to Jan 2020, the maximum level for the EUR/USD (Euro US Dollar) was 1.1280 (on 10/08/19), and the minimum, 1.0896 (on 30/09/19).
MOST INFLUENTIAL POLITICAL EVENTS IN 2020 FOR EUR/USD
2020 should be the year of change or at least, the year when things begin to change. The recent trade deals hint some relief in the trade war front, hence in growth’s concerns. Economic developments and central banks’ decisions will motorize action throughout the first half of the year. In November 2020, the US will go to the polls. That grants a shaky year-end in the financial world. Will Trump be able to retain its chair?.
Influential Institutions & People for the EUR/USD
The Euro US Dollar can be seriously affected by news or the decisions taken by two main central banks:
The European Central Bank (ECB)
The European Central Bank (ECB) is the central bank empowered to manage monetary policy for the Eurozone and maintain price stability, so that the euro’s purchasing power is not eroded by inflation. The ECB aims to ensure that the year-on-year increase in consumer prices is less than, but close to 2% over the medium term. Another of its tasks is one of controlling the money supply. The European Central Bank’s work is organized via the following decision-making bodies: the Executive Board, the Governing Council and the General Council. Christine Lagarde is the President of this organism.
ECB Official Website, on Twitter and YouTube
The Federal Reserve Bank (Fed)
On the other
FED Official Website, on Twitter and Facebook
Christine Lagarde
Christine Lagarde was born in 1956 in Paris, France. Graduated from Paris West University Nanterre La Défense and became President of the European Central Bank in November 1st 2019. Prior to that, she served as Chairman and Managing Director of the International Monetary Fund between 2011 and 2019. Lagarde previously held various senior ministerial posts in the Government of France: she was Minister of the Economy, Finance and Industry (2007–2011), Minister of Agriculture and Fishing (2007) and Minister of Commerce (2005–2007).
Lagarde on ECB'S Profile and Wikipedia
Jerome Powell
Jerome Powell took office as chairman of the Board of Governors of the Federal Reserve System in February 2018, for a four-year term ending in February 2022. His term as a member of the Board of Governors will expire January 31, 2028. Born in Washington D.C., he received a bachelor’s degree in politics from Princeton University in 1975 and earned a law degree from Georgetown University in 1979. Powell served as an assistant secretary and as undersecretary of the Treasury under President George H.W. Bush. He also worked as a lawyer and investment banker in New York City. From 1997 through 2005, Powell was a partner at The Carlyle Group.
Jerome Powell Fed's Profile and Wikipedia
ECB NEWS & ANALYSIS
FED NEWS & ANALYSIS
About EUR/USD
The EUR/USD (or Euro Dollar) currency pair belongs to the group of 'Majors', a way to mention the most important pairs in the world. This group also includes the following currency pairs: GBP/USD, USD/JPY, AUD/USD, USD/CHF, NZD/USD and USD/CAD. The popularity is due to the fact that it gathers two main economies: the European and American (from United States of America) ones. This is a widely traded currency pair where the Euro is the base currency and the US Dollar is the counter currency. Since the EUR/USD pair consists of more than half of all the trading volume worldwide in the Forex Market, it is almost impossible for a gap to appear, let alone a consequent breakaway gap in the opposite direction.
Normally, it is very quiet during the Asian session because economic data that affects the fundamentals of those currencies is released in either the European or U.S. session. Once traders in Europe get to their desks a flurry of activity hits the tape as they start filling customer orders and jockey for positions. At noon activity slows down as traders step out for lunch and then picks back up again as the U.S. comes online. If there is important U.S. data we can expect quiet markets just ahead of the number. U.S. economic news have the ability to either reinforce an existing trend or reverse it depending on by how much it missed or beat expectations with the EUR/USD news. By 5:00 GMT liquidity leaves the market once again as European traders close out positions and head home.
Related pairs
GBP/USD
The GBP/USD (or Pound Dollar) currency pair belongs to the group of 'Majors', a way to mention the most important pairs worldwide. This group also includes the following currency pairs: EUR/USD, USD/JPY, AUD/USD, USD/CHF, NZD/USD and USD/CAD. The pair is also called 'The Cable', reffering to the first Transatlantic cable that was crossing the Atlantic Ocean in order to connect Great Britain with the United States of America. This term was originated in the mid-19th century and it makes GBP/USD one of the oldest currency pairs in the world.
The popularity of the Pound Dollar is due to the fact that represents two strong economies: British and American (from United States of America). The Cable is a widely observed and traded currency pair where the Pound is the base currency and the US Dollar is the counter currency. After the result of the Brexit referendum, where the majority of the British voted to abandon the European Union, GBP/USD has been suffering some turbulence in the Forex market as a consequence of the associated risks of leaving the single market.
USD/JPY
The USD/JPY (or US Dollar Japanese Yen) currency pair is one of the 'Majors', the most important pairs in the world. Japanese Yen has a low interest rate, normally used in carry trades, that's why is one of the most trades currencies worldwide. In the USD/JPY the US Dollar is the base currency and the Japanese Yen is the counter currency. The pair represents American (from United States of America) and Japanese economies.
Trading the USD/JPY currency pair is also known as trading the "ninja" or the "gopher", although this last name is more frequently used when reffered to the GBP/JPY currency pair. The US Dollar Japanese Yen usually has a positive correlation with the following two pairs: USD/CHF and USD/CAD. The nature of this correlation is dued to the fact that both currency pairs also use the US Dollar as the base currency, such as USD/JPY. The value of the pair tends to be affected when the two main central banks of each country, the Bank of Japan (BoJ) and the Federal Reserve Bank (Fed), face serious interest rate differential.