Forex:Euro takes warning signs in stride … for now

The Euro has refused to buckle under the weight of lacklustre economic data and dire warnings of late.

Germany’s factory orders and industrial production came in less-than-expected in May, and points to a long and laborious recovery for Europe’s largest economy. Factory orders in May registered a 10.4 percent growth compared to April, below market forecasts of 15.4 percent, while May’s industrial production posted a month-on-month expansion of 7.8 percent, as opposed to the expected 11.1 percent. On Tuesday, the European Commission also warned that the coronavirus pandemic could deal a larger-than-expected blow to the economy, forecasting a revised 8.7 percent contraction for the Euro-area in 2020, which is about one percentage point lower compared to previous estimates.

Even though the news saw EURUSD pulling further away from the upper bounds of its current range (1.135 – 1.117), the drop was limited, thanks to the softer Dollar. EURUSD remains elevated compared to the 1.076 – 1.100 levels seen in April and May. In late June, the 50-day simple moving average’s crossing above its 200-day moving average suggests that the currency pair could yet break to the upside of its current range (above 1.135) even though the upward momentum has waned.

From a fundamental perspective, the Euro’s buoyancy appears to be due to the baked-in optimism over the EU’s proposed EUR750 billion recovery plan. However, as EU leaders meet in Brussels next week (July 17-18) to iron out the details of the support package, any signs of discord at the negotiating table could weigh on the Euro and unwind recent gains.

The EU’s pandemic response will also be compared to developments in the States, and such contrasts are being manifested in EURUSD’s performance. Although Europe appears to be having a better handle on stemming the coronavirus’s spread, investors cannot yet rule out a second wave of outbreaks on the continent, nor a double-dip in its economy. Should these downside risks become reality, that may trigger a wave of risk aversion at the expense of the Euro, while strengthening safe havens such as the US Dollar, Japanese Yen, and the Swiss Franc.

Already, global risk-on sentiment appears to be fading, evidenced by the stalling rally in stock markets, as well as EURCHF carving a path back towards the 1.06 mark, having fallen by 2.6 percent since registering its year-to-date peak above the 1.090 psychological level. The Euro needs risk appetite to remain resilient in order to hang on to recent gains.

 


MyFxtops 邁投 (www.myfxtops.com) -Reliable Forex Copy Trade community, follow the master for free to trade!

Disclaimer: This article is reproduced from the Internet. If there is any infringement, please contact us to delete it immediately. In addition: This article only represents the personal opinion of the author and has nothing to do with Mato Finance The originality and the text and content stated in this article have not been confirmed by this site. The authenticity, completeness and timeliness of this article and all or part of the content and text are not guaranteed or promised. Please refer to it for reference only Verify the content yourself.

Copyright belongs to the author.
For commercial reprints, please contact the author for authorization. For non-commercial reprints, please indicate the source.

風險提示

MyFxtops邁投所列信息僅供參考,不構成投資建議,也不代表任何形式的推薦或者誘導行為。MyFxtops邁投非外匯經紀商,不接觸妳的任何資金。 MYFXTOPS不保證客戶盈利,不承擔任何責任。從事外彙和差價合約等金融產品的槓桿交易具有高風險,損失有可能超過本金,請量力而行,入市前需充分了解潛在的風險。過去的交易成績並不代表以後的交易成績。依據各地區法律法規,MyFxtops邁投不向中國大陸、美國、加拿大、朝鮮居民提供服務。

邁投公眾號

聯繫我們

客服QQ:981617007
Email: service@myfxtop.com

MyFxtops 邁投