EUR/USD above 1.1500 with new yearly highs – further gains to come?

By Admiral Markets

Source: Economic Events July 24, 2020 – Admiral Markets’ Forex Calendar

Since EU leaders reached a deal at the EU summit over the last weekend, where they agreed on a post-pandemic recovery package to support the EU economy by offering 750 billion euros in grants and loans to the countries being hit the hardest and to counter the impacts of the Covid-19 pandemic, the EUR/USD finally saw the push to above 1.1500, new yearly highs, as a result.

In addition to the Euro’s strength, the US dollar came under pressure as 10-year US yields attacked the important region of support around 0.60%, leaving the impression for a soon-coming significant break lower.

In fact, we could imagine such a break to happen for the weekly close if US economic projections do not continue the solid performance it has shown over the last few weeks, where it pushed the Citi economic surprise index to an all-time high.

Disappointing US data would come at an unfortunate time, since signs are showing that a second US Coronavirus relief bill is unlikely to pass in July, and the federal unemployment benefits expire at the end of next week.

That said, the Euro should continue to outperform the US dollar, and with US yields about to break lower, the path up to 1.1700/1800 in the coming days seems set.

Technically, the mode stays bullish on a daily time-frame as long as we trade above 1.1150/1200 with signs of diminishing bullish momentum through the bearish divergence in the RSI(14), but the overall advice should be “buy a dip against 1.1400/30”:

Source: Admiral Markets MT5 with MT5-SE Add-on EUR/USD Daily chart (between May 24, 2019, to July 23, 2020). Accessed: July 23, 2020, at 10:00pm GMT – Please note: Past performance is not a reliable indicator of future results, or future performance.

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

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