EURUSD Trading for June 20, 2020

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Contents

EUR/USD Exchange rate

Asset rates

Asset rates

USD/JPY back on the bids above 108.50, awaits Tokyo open

Amid a rally in S&P 500 futures and a broadly firmer US dollar, USD/JPY picks up bids and regains 108.50. Investors await a fresh impetus on the Tokyo open. Japan is likely to declare a state of emergency, as coronavirus spread intensifies.

GBP/USD: A bearish start to the week as UK PM hospitalized amid coronavirus

GBP/USD started out a fresh week on a negative note in Asia this Monday. The pair sold-into news that UK PM Johnson gets hospitalized. UK Construction PMI eyed amid a quiet macro day this Monday.

AUD/USD battles 0.6000 amid broad USD strength, oil slump

Having kick-started the week on the front foot, AUD/USD is trying once again to extend the bounce from a five-day low of 0.5979. US dollar bulls take a breather before the next push higher. Eyes on coronavirus updates, as the focus shifts to RBA decision.

WTI downed 10% at Asia open as OPEC+ meeting pushed backed

WTI kicks-off the week sharply lower on OPEC+ meeting woes. Oil reverses 30% gains seen last week on hopes of OPEC+ output cuts. All eyes on the US and OPEC headlines amid coronavirus updates.

Gold remains confined in a range, moves little post-NFP

Gold extended its sideways consolidative price action around the $1615 region and had a rather muted reaction to the US monthly employment details

Majors

Japan’s LDP Chief Kishida: Govt close to finalising the economic relief package

AUD/USD battles 0.6000 amid broad USD strength, oil slump

GBP/USD: A bearish start to the week as UK PM hospitalized amid coronavirus

Cryptocurrencies

Tapping Into Tokenization for Fresh Ideas: Changing Finance, Gaming and More

Cryptocurrency market update: Major cryptos remain on track to post weekly gains

Cryptocurrency market update: Major cryptos trade in tight ranges on Saturday

Signatures

The Long Winter

Coronavirus Deaths: How Badly Undercounted Are They?

Week Ahead – World battles spread of Covid-19 and its economic destruction, a bigger OPEC +cut deal, and big bank stress tests

THE MOST TRADED CURRENCY PAIR

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. The popularity of Euro Dollar is due to the fact that it gathers two main economies: Europe and the United States of America. 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.

The EUR/USD reached an all time high of 1.6038 in July 2008 and a record low of 0.8231 in October 2000.

EUR/USD FORECAST 2020

In her article called “Lean times soon to turn into flush times for euro dollar” published at the end of the year 2020, Valeria Bednarik talks about the EUR/USD Forecast and explains that “the focus this time shouldn’t be put on technical readings, but in politics”.

“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. Whether the economies will be able to grow or not without the trade conflict in the way, is a different story. But optimism is supposed to reign.”

MOST INFLUENTIAL CURRENCIES FOR EUR/USD

The EUR/USD pair can also be impacted by other currencies, in particular GBP, CAD, JPY, CNY, and AUD. This group also includes the following currency pairs: GBP/USD, USD/JPY, AUD/USD, USD/CHF, NZD/USD, USD/CAD, GBP/JPY and EUR/JPY

MOST INFLUENTIAL ORGANIZATIONS FOR EUR/USD

The organization that most impact has nowadays the EUR/USD is the Federal Reserve, the central banking system of the United States of America created with the enactment of the Federal Reserve Act, after a series of financial panics led to the desire for central control of the monetary system in order to alleviate financial crises. Jerome Powell is Fed’s Chair, serving in that office since February 2020.

The Board of Governors (also known as the Federal Reserve Board) is carefully observed. The board meets several times per year and announces the interest rates. If rates remain unchanged, attention turns to the tone of the FOMC (Federal Open Market Committee) statement. Also particularly significant are the 12 Federal Reserve Banks that make up the Federal Reserve. These Federal District Reserve Districts issue their own statements and research data that give hints about the health of the US economy and might as well influence dollar-related currency pairs.

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The US Government is as well an institution of great importance for the EUR/USD pair: events as administration statements, new laws and regulations or fiscal policy can increase or decrease the value of the US Dollar and the currencies traded against it.

Not only American institutions influence the EUR/USD pair, European too of course. And the number one organization is the European Central Bank, which is the central bank for the euro and administers monetary policy within the Eurozone, comprising 19 member states of the European Union and is one of the largest monetary areas in the world. ECB’s main objective is to maintain price stability for the Euro while setting and implementing the monetary policy for the Eurozone (including interest rates). It also conducts foreign exchange operations and takes care of the foreign reserves of the European System of Central Banks. Christine Lagarde is ECB’s President since November 2020.

EUR/USD News (Euro US Dollar)

EUR/USD extends slump after NFP shows massive job loss

EUR/USD is trading below 1.08, down on the day. The Non-Farm Payrolls report has shown a loss of 701,000 jobs, worse than expected. The ISM Non-Manufacturing PMI surprised to the upside with 52.5 points.

Latest EURUSD News

Forex Today: Dollar the strongest as risk aversion rules

EUR/USD steadies near 1.0800, erases more than 300 pips weekly

EUR/USD: Heading firmly lower

Technical Overview

EUR/USD has lost more than 50% of the gain from 1.0640 to 1.1150, raising the chances that the rise was the correction and that new lows are on the cards. The currency pair is trading below the 50, 100, and 200 Simple Moving Averages, and the Relative Strength Index is above 30 – outside oversold conditions.

Support awaits at 1.0820, Thursday’s low, followed by 1.0750, which was a stepping stone on the way up. The 2020 trough of 1.0640 is critical support.

Resistance awaits at 1.09, which provided support earlier this week, and it is followed by 1.0970, which held it down around the same time. The next levels to watch are 1.1050 and 1.1090.

Fundamental Overview

Around half of global COVID-19 deaths are concentrated in Italy, Spain, and France – and that is only one of the factors erasing over 50% of late March’s gains.

1) Worrying coronavirus figures in Europe

While Italy has seen as a flattening of the curve – fewer deaths and new cases under control – Spain is setting records in mortalities on an almost daily basis. France, which counts only losses of lives in hospitals, is also seeing rising numbers. The three countries have 29,650 out of 53,146 global deaths.

Updates figures from Spain are due out in the European morning, followed by France and Italy.

2) No coronabonds

Leaders in the old continent remain at loggerheads over the economic relief for the crisis. The three countries and others are demanding “coronabonds” – issuing joint European debt. Germany is leading the opposite camp. Ursula von der Leyen, President of the European Commission, is looking for a compromise alongside the Eurogroup – European finance ministers.

However, without an immediate solution to the fast-evolving problem, the euro has room to the downside. Sapin reported a leap of 300,000 in jobless claims, allowing the first look into the economic carnage of coronavirus. Markit’s final Service Purchasing Managers’ Indexes will likely confirm the weakness.

3) When the US sneezes, the world catches a cold

Crossing the Atlantic, US Unemployment Claims also paint a grim picture. Requests for benefits have more than doubled to 6.648 in the week ending March 28 – beyond the worst estimates. Moreover, figures could have been even higher as some states struggled to process the flood of claims. The current level of applications represents an unemployment rate of roughly 10%.

The US dollar gained ground in response to the figures and remains the currency of choice in times of trouble. If the US struggles, the rest of the world suffers, and the dollar is demand.

The focus now shifts to the first coronavirus-impacted Non-Farm Payrolls report – yet it lags jobless claims by around two weeks. March’s labor market surveys were taken on the week including March 12. While it is unlikely to show the devastating destruction of jobs, a loss of 100,000 positions is on the cards. The figures could be a win-win for the dollar.

  • Nonfarm Payrolls Preview: Is the dollar’s fate sealed?
  • US Non-Farm Payrolls March preview: If it’s terrible, it’s expected, if it’s not, April will be

The ISM Non-Manufacturing PMI is due out after the NFP, but may still move markets. Services sectors all over the world have struggled more than the manufacturing sectors. Economists expect a sharp drop below 50 – reflecting contraction.

See: Non-Manufacturing PMI Preview: The disaster may be delayed. until April

What about the coronavirus situation in the US? It remains dire, with nearly a quarter of the million infections gripping the world’s largest economy. Nevertheless, the rapid spread of the disease in America may prove as another boost for the safe-haven greenback.

EUR/USD Trading for June 20, 2020

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