The Case for a Bullish EURUSD Scenario

FXOpen

The EURUSD consolidates for about two weeks now, after bouncing from the 1.08 area all the way to 1.14. Voices now call for a move back below 1.10, as the European Central Bank (ECB) signaled a massive demand for its TLTRO (Targeted Long-Term Refinancing Operations) – the banks in the Euro area took almost EUR1.4 trillion.

Naturally, all that money goes somewhere, and by flooding the market with newly printed Euros, the ECB creates the conditions for a weaker currency. However, a close look at the EUR speculative positioning (percentage of open interest), reveals that the market is about ten percent long the Euro against the USD – a lower exposure compared with previous data. In other words, there is more room to go.

EURUSD forecast on 22 June, 2020

Since reaching the 1.14 level, the pair drifted lower in what seems to be a corrective pattern. It closed last week below the 1.12 level, with no important economic events scheduled this week.
But the focus these days is on how the market interprets the actions taken by the central banks. If the market sees the ECB as more proactive than the Fed, then the EURUSD pair has more room to go.

Moreover, uncertainty does not help the USD. With the US election just around the corner and record daily cases of new coronavirus infections, the United States does not offer the perfect investing scenario to grant appealing risk-reward ratios.

Finally, the US Treasury revealed that, while issuing more debt, it built a pile of cash (over $1.5 trillion) and stands ready to deploy it. In other words, the amount is roughly the equivalent of the ECB’s TLTRO injection, putting the Euro on equal foot with the USD, from a central banking point of view.

Further EURUSD strength is possible on a move above 1.14. Until then, the market may consolidate further, especially considering that summer trading conditions are already in place.

This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

Latest from Financial Market News

Weekly Market Wrap With Gary Thomson: Nasdaq 100, NVIDIA, EUR/USD, Gold price Weekly Market Wrap With Gary Thomson: S&P500, US Dollar, Gold Price, PEP Stocks Weekly Market Wrap With Gary Thomson: UK100, Hang Seng Index, AUD/JPY, GBP/USD, USD/CAD Japanese Yen Goes on Volatility Drive after US Economic Uncertainty Surfaces Weekly Market Wrap With Gary Thomson: FTSE100, US Dollar, USD/JPY, BTC/USD

Latest articles

Weekly Market Wrap With Gary Thomson: Nasdaq 100, NVIDIA, EUR/USD, Gold price
Financial Market News

Weekly Market Wrap With Gary Thomson: Nasdaq 100, NVIDIA, EUR/USD, Gold price

Get the latest scoop on the week's hottest headlines, all in one convenient video. Join Gary Thomson, the COO of FXOpen UK, as he breaks down the most significant news reports and shares his expert insights. Read the latest news

Analytical Tesla Stock Predictions for 2024, 2025 – 2030 and Beyond
Trader’s Tools

Analytical Tesla Stock Predictions for 2024, 2025 – 2030 and Beyond

Tesla's stock has experienced significant volatility since its IPO in 2010, driven by its significant technological advancements and status as a leading electric vehicle producer. This article explores Tesla's recent price history, analyses its outlook for 2024 and 2025, and

Commodities

Gold Price Drops Over 3.6% in 2 Days

The price of gold has fallen by more than 3.6% over 2 days, as indicated by today's XAU/USD chart. The day before yesterday, at the opening of the daily candle, the price of gold was $2421 per ounce,

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 60% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.