Fundamental Viewpoint EUR/USD

The financial markets anticipate that the lockdowns will be carefully lifted. This will allow the economies to proliferate from June onwards, starting from the bottom they have hit. At the end of this year, they may run at a level that is approximately 10% lower compared to the level before the corona crisis.

The negative factors for the dollar may prevail in the coming year / two years, because of which EUR/USD will rise to at least 1.20. In the short term, however, demand for the dollar to repay loans ahead of schedule could carry the most weight, so that we may assume that the pair will fall back to 1.00-1.05 before the uptrend to 1.20 starts in earnest.

TECHNICAL OUTLOOK EUR/USD

From the perspective of technical analysis of charts, a decline below 1.07 would indicate a further decrease, while a rise above 1.115 would mean new growth.

In the short-term, we see the contours of a so-called ‘symmetrical triangle’ (convergence of upper and lower trendlines). We will gain more clarity about the near-term direction as soon as the FX pair breaks out of this consolidation phase. Also note that the price is hovering close to both the sideways 20-day and 50-day moving averages, which confirms that no clear trend in either direction is present.

The medium-term outlook is neutral just as much. In concrete terms, we take a neutral stance as long as year-low support at around 1.064 and key resistance around 1.115 stays intact. On the downside, the 2016 low near 1.034 serves as a minimum price target in case of a sustained fall below 1.064.

However, in case of a clear breakout above 1.115, the medium-term outlook turns bullish instead. It suggests that a further upward move is in the offing, initially towards 1.15, whereas a second bullish target lies near 1.21.

IVANS OVCARUKS

Head of Brokerage – Streams Financial Services Ltd.

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