EURUSD headed to 1.2000 before the ECB meeting next week?

By Admiral Markets

Source: Economic Events October 23, 2020 – Admiral Markets’ Forex Calendar

With upcoming selling pressure in the US-Dollar, EURUSD is pushing significantly back above 1.1800, currently eyeing the region around 1.1900.

There is a reason we have pointed out the selling pressure in the US-Dollar and not Euro strength:

• We are very sceptical, in terms of the European currency
• We see intensifying signs of very dovish rhetoric from the ECB next week on Thursday
• The ECB is likely to significantly weaken the Euro

These signs can, for example, be seen when looking at the Invesco Euro Currency Shares ETF which saw its 2nd biggest capital weekly outflow last week amongst all Eurozone-related ETF’s, most likely in anticipation of a dovish ECB next week.

But with further US-Dollar weakness to be expected once Democrats and Republicans finally reach a deal on an economic relief package, financed with freshly printed US-Dollar from the US central bank FED, the question seems to be: how dovish can the ECB be to counter the ongoing dovishness of the FED and USD weakness?

We feel that chances are high that we’ll see some heavier volatility in the days to come, especially into next week’s weekly close (Thursday and Friday), but that traders should remain careful in regards to short-term dips in the EURUSD.

The fact that the currency pair hasn’t seen another run down to the 1.1600 area and lower indicates substantial buying of the Euro/selling of the USD taking place, leaving any short-term dip to be short-lived, with the currency pair likely to see an aggressive attempt to capture 1.2000 into the monthly close, especially if a break above 1.1900 is seen:

Source: Admiral Markets MT5 with MT5SE Add-on EURUSD Daily chart (between July 17, 2019, to October 22, 2020). Accessed: October 22, 2020, at 10:00 PM GMT. Please note: Past performance is not a reliable indicator of future results, or future performance.

In 2015, the value of the EURUSD fell by 10.2%, in 2016, it fell by 3.2%, in 2017, it increased by 13.92%, in 2018, it fell by 4.4%, and in 2019, it fell by 2.2%, meaning that in five years, it was down by 7.3%.

Discover the world’s #1 multi-asset platform

Admiral Markets offers professional traders the ability to trade with MetaTrader 5, allowing you to experience trading at a significantly higher, more rewarding level than with MetaTrader 4. Experience benefits such as the addition of the Market Heat Map, so you can compare various currency pairs to see which ones might be lucrative investments, access real-time trading data, and so much more. Click the banner below to start your FREE download of MT5!

Disclaimer: The given data provides additional information regarding all analysis, estimates, prognosis, forecasts or other similar assessments or information (hereinafter “Analysis”) published on the website of Admiral Markets. Before making any investment decisions please pay close attention to the following:

1. This is a marketing communication. The analysis is published for informative purposes only and is in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
2. Any investment decision is made by each client alone whereas Admiral Markets shall not be responsible for any loss or damage arising from any such decision, whether or not based on the Analysis.
3. Each of the Analysis is prepared by an independent analyst (Jens Klatt, Professional Trader and Analyst, hereinafter “Author”) based on the Author’s personal estimations.
4. To ensure that the interests of the clients would be protected and objectivity of the Analysis would not be damaged Admiral Markets has established relevant internal procedures for prevention and management of conflicts of interest.
5. Whilst every reasonable effort is taken to ensure that all sources of the Analysis are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admiral Markets does not guarantee the accuracy or completeness of any information contained within the Analysis. The presented figures that refer to any past performance is not a reliable indicator of future results.
6. The contents of the Analysis should not be construed as an express or implied promise, guarantee or implication by Admiral Markets that the client shall profit from the strategies therein or that losses in connection therewith may or shall be limited.
7. Any kind of previous or modelled performance of financial instruments indicated within the Publication should not be construed as an express or implied promise, guarantee or implication by Admiral Markets for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.
8. The projections included in the Analysis may be subject to additional fees, taxes or other charges, depending on the subject of the Publication. The price list applicable to the services provided by Admiral Markets is publicly available from the website of Admiral Markets.
9. Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, you should make sure that you understand all the risks.

By Admiral Markets